Institutional customers holding Ethereum can now access bank-quality loans, with the held ETH providing collateral
Crypto custody and digital banking provider Anchorage Digital is now offering an Ethereum-backed loan product for institutional investors. Digital Asset Bank will offer the loan service in collaboration with BankProv, an FDIC-insured bank that is currently the tenth oldest legacy bank in the United States.
The crypto bank already issues secured loans to customers who own Bitcoin. But now institutional clients can borrow USD in USD on their Ethereum holdings, in a simple arrangement that allows clients to continue holding their crypto positions. To protect against payment defaults, the bank keeps the Ethereum as collateral.
It does so even if the crypto space continues to see soaring demand for ETH loans despite a recent weakness that has been decimating price gains. Inflows into Ethereum skyrocketed last week, with investors seeing the price crash more as an opportunity to buy the crypto at a bargain price.
According to Dave Mansfield, CEO of BankProv, the partnership with Anchorage is in line with that “Mission and conviction that the crypto market should be granted the same access and the same rights to traditional financial instruments as any other legal, well-capitalized and legally compliant company …”
Digital banks bring people into crypto
In January, Anchorage received approval from the Office of the Comptroller of the Currency (OCC) to become the first federally chartered crypto bank. The charter enables Anchorage to offer custody services to traditional banks that wish to provide crypto-related services.
On February 25, Anchorage announced that its Series C funding round raised $ 80 million, with the funds being earmarked to expand its digital lending services. GIC, Singapore’s sovereign wealth fund, led the financing with the participation of Blockchain Capital, Lux and Indico.
Elsewhere, the British digital bank Revolut has announced that it will add more cryptocurrencies to its list of supported coins. The bank’s app already supports 21 tokens, including Polygon (MATIC), Cosmos (ATOM) and Chainlink (LINK).