BlockFi Raises Cash to Push Cryptocurrency-Backed Loans

July 27, 2024         By: Steven Anderson

Just a couple days ago, we heard about DEPO from Depository Network, a tool that would help banks accept cryptocurrency as a collateral for loans. It might have the first-mover advantage, but it’s going to be extremely slim thanks to new word from BlockFi, who just raised a whopping $52.5 million to do pretty much the same thing.

BlockFi landed its hefty payday from a collection of investors led by Galaxy Digital Ventures LLC, the reports note. BlockFi didn’t just land a wallet-stretching investment from Galaxy Digital, but was also declared Galaxy Digital’s exclusive lending partner in the consumer space. The investment and agreement came with some conditions, including a new member on BlockFi’s board of directors in Galaxy Digital’s head of principal investments Chris Ferraro.

Given that BlockFi already had the largest geographical coverage of any cryptoasset-backed borrowing platform in the United States, this latest move should only expand that coverage.

The rapid expansion BlockFi witnessed is largely thanks to its current capabilities; it’s been described as both the “fastest” and the “most affordable” option around when it comes to cryptoasset-backed borrowing. Several of BlockFi’s early clients came back with noteworthy testimonials about using their crypto-backed loans to buy real estate, start small businesses, or pay down outstanding debt that’s at higher rates than a crypto-backed loan would be.

BlockFi’s almost frantic push to go mainstream—it pushed for lending licenses in multiple states in the US and apparently got them—illustrates just how smart a plan it really had here. Rather than trying to get in on the periphery, it was almost forcing itself into everyday operations of large-scale banks. It might well have defused some concerns about cryptocurrency right from the word go. No matter what we may individually think about it, it is an item that has some value, and not just on paper. Just ask the folks at Overstock.com if you doubt that.

If cryptocurrency ever becomes a serious collateral for loans, it will effectively be mainstream. Being able to borrow against the value of anything makes it a thing with value—who would loan against it if it had no value?—and if it has value, it must be usable.