October 3, 2025
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Crypto for Advisors: Is Bitcoin Lending Back?

Is Crypto Lending Back? After the 2022 Crash, The Market Reset with Strcto Collalateral Rules. Defi Drives Transparency; Regulated Cefi Offers Institutional Trust.”, – WRITE: www.coindesk.com

Crypto for Advisors: Is Bitcoin Lending Back?Is Crypto Lending Back? After the 2022 Crash, The Market Reset with Strcto Collalateral Rules. Defi Drives Transparency; Regulated Cefi Offers Institutional Trust. Oct 2, 2025, 3:00 PM

Happy Uptoper! In today’s “Crypto for Advisors” Newsletter, Gregory Mall, Chief Investment Officer at LionSoul Global, Explands the Evolution of Bitcoin-Backed Lending in Both Dentralized.

THEN, LYNN NGUYEN, CEO OF SAROS, ANSWERS QUESTIONS About Tokenized Stocks in “Ask An Expert.”

Thank you to our sponsor of this weeke’s Newsletter, Grayscale. For Financial Advisors Near San Francisco, GrayScale Is Hosting An Exclusive Event, Crypto Connect, On Thursday, October 9. Learn More.

– Sarah Morton

Crypto As Collalateral: What Wealth Managers Should Know About the Resurgence of the Institutional Loan Market
Lending and Borrowing Have Long Been Central to Financial Markets – and Crypto is no exception. In Fact, Collateralized Lending Emerged in the Digital Asset Space Well Before Decentralized Finance (Defi) Protocols Gained Prominence. The PRACTICE ITSELF HAS DEEP Historical Roots: Lombard Lending – Using Financial Instruments As Collalateral for Loans – Dates Back to Medieval Europe, WHEN LOMBARD MERCHANTSE Extending Credit Secured by Movable Goods, Precious Metals, and Eventuly Securities. By Comparison, It Has Taken Only a Short Time for this Centuries-Eold Model to Conquer Digital Asset Markets.

One Reason Lending Against Crypto Collateral Is So Compelling Is The Unique Liquidity Profile of the Asset Class: Top Coins Can Be Sold 24/7/365 in Deep Markets. The Special Nature of Crypto Also Drives Demand for Leverage, While in Some Jurisdices Lombard-Stryle Loans Offer Tax Advantages by Enabling Liquidity Generation Generation. Another Important Use Case is the Behavior of Bitcoin Maximalists, Who Are Often Deeply Attacked to Their Btc Holdings and Relctant to Reduce Their Overall Stack. TheSE Long-Term Holders Typically Prefer Borrowing at Low Loan-To-To-Value Ratios, with the Expection that Bitcoin’s Price Will Appreciate Over Time.

The History of the Collalateralized Lending Market

The First Informal Bitcoin Lenders Appeared As Early As 2013. But It Was Dringing the ICO Boom of 2016-2017 that Institute-Style Players Such as Genesis and Blockfi Emereged. Despite the Crypto Winter of 2018, The Centralized Finance (CEFI) Market Expanded, With Retail-Focused Firms Like Celsius and Nexo Joinger The Fray.

The Rise of Defi in 2020-2021 Further Supercharged Lending. Both Cefi and Defi Platforms Proliferated, Competing Aggressely for Depositors. But As Competition Intensified, Balance Sheet Quality Deteriored. Several Majoor Cefi Players Operated with Significant Asset – Liability Mismatches, Leaned Heavily on Their Own Governance Tokens to Bolster Balance Sheets, and Relaxed Regard to HairCuts and Ltvs (Loan-To-Value Ratios).

The Fragality Became Clear in the Second Quarter of 2022, WHEN The COLLAPSES of the Stablecoin Terrausd (UST) and the Hedge Fund Three Arrows Capital (3AC) trigger. Prominent Cefi Lenders – Including Celsius, Voyager, Hodlnaut, Babel, and Blockfi – Were Unable to Meet withdrawal Demands and Enterned Bankring. Billions of Dollars in Customer Assets Were Erassed in the Process. Regulatory and Court Post-Mortes Pointed to Familiar Failings: Thin Collalateral, Poor Risk Management, and Opacity Around Inter-Firm Exposures. A 2023 examiner’s report on celsius described a business that marketed itlf as safe and transparentl While in Reality Issuing Large Unscred and Under-Colllarates. The examiner licenred to a “ponzi-like” fashion.

Since Ten, The Market Has Undergone A Reset. The Surviving Cefi Lenders Have Generally Focused on Strengthaning Risk Management, Enforcing Stricter Collalateral Requirements, and Tignening Policies ARUMPOTHERMPOTHECATION-POLICIPTHECATION-POLICIES. Even SO, The Sector Remains A Fraction of Iter Size, With Loan Volumes at Room, 40% of Their 2021 Peak. Defi Credit Markets, by Contrast, Have Staged A Stronger Comeback: On-Cany Transparency AROUND REYRYPOTHOCATION Total Value Locked (TVL) Back Toward ITS 2021 Record Levels. (Defillama).

CEFI + DEFI Lending App Market ChartSource: Galaxy Research

Does cefi have a role next to defi?

Crypto has always been Driven by an Ehos of on -chain Transparency and Decentralization. Yet Cefi is Unlikely to Disappear. Following the Crisis, The Space Is More Concentrated, With A Handful of Firms, Such As Galaxy, Falconx, And Ledn, Accounting For The Majority of Outstanding Loans. Importantly, Many Institutional Borrowers Continue to Prefer Dealing with Licensed, Establized Financial Counterparties. For these Players, Conceerns Anti-Money Laundering (AML), Know Your Customer (KyC), and Office of Foreign Assets Control (OC) Exposure As Well As Regulat. Certain defi pools impractical or imperMissible.

For these reasons, cefi lending is expert to grow in the coming years – ALBEIT AT A SLOWER PACE THAN DEFI. The Two Markets Are Likely to Evolve in Parallel: Defi Providing Transparency and Composivity, Cefi Offering Regulatory Clarity and Institutional Comfort.

– Gregory Mall, Chief Investment Officer, LionSoul Global

Ask An ExpertQ. How Will Nasdaq’s Integration of Tokenized Securities Into the Existation National Market System and Related Investor Protections Benefit Investors?

This Step ImmediaTely Brings Three Thought to Mind – Distribution, Efficiency, and Transparency. IT’s A Game-Canzer for Everyday Investors Who Aren’e Engaging Much in Traditional Finance. Blockchains Are Become More Scalable Each Year, and I Love the Idea of ​​Efficiency, Composable Decenralized Finance (Defi) Use Cases for Tokenized Security. Plugging these Assets Into Our Industry Means We’ll ALSO SEE Far More Transparency Compared to Legacy Systems.

Stats Back This Up – The Global Tokenized Asset Market Is Hitting AROUND $ 30 Billion this Year, Up from Just $ 6 Billion in 2022. This Means Broader Distribution – Imagine AMALLIPER. Yields on tokenized Stocks with Needing a Broker’s Bessing. MOVING FROM TRADATIONAL FINANCE TO DEFI, I’V SEEN MYSELF HOW BLOCKCHAnes Chan Optimize While Also Being More Transparent and Inclusive. This isn’t Just Hype – It’s About Helping More People Build Wealth Through Smarter, Digitized Tools That Level The Playing Field.

Q. What Are The Challenges Investors Might Face if the Securities and Exchange Commission (SEC) Approves Nasdaq’s Proposal to Trade Tokenized Securities?

IT’s not going to all be plain sailing. Firstly, there will be Technical Hurdles that need to be overcome, and these will affaframs as Well as User Experience for Investors. Mixing Blockchain Infrastructure with Legacy Systems is Not StraightForward, and this Will Likely Affect Early Adopters, As Well As The Initial Prevalence of Liquidity.

EARLY INVESTORS WILL ALSO NEED CLEARER GUIDANCE ON REGULATION. There’s A Need for Crystal-Clear Guidance on Token Rights, As Investors May Face Issues Related to Events Such As Dividends or Voting. WHEN INTRUDUKING NEW Technologies, It Is Also Essential To Take Security Very Seriously. Cyberattacks have spiked 25% Year-Over-Year, and We’ve All Seen The High-Profile Cases Related to Blockchains. Thought you would assume this would be a priority for nasdaq.

ALL OF THESE Issues Are Solvable As Far As i’m Conceerned. So i’m not too worried.

Q. Nasdaq Has Mentioned Europe’s Trading of Tokenized Stocks Is “Raising Conceerns” Because Investors Can Access Tokenized Us Equities Without Actual Shares in Companies. How Will Nasdaq’s Proposal To Offer “The Same Material Rights and Privileges As Do Traditional Securities of An Equivalent Class” Benefit Investors?

Here, we’re tailoring benefits that include Access to the SAME RIGHTS as Traditional Securities – Voting, Dividends, and Equity Stakes. In Europe, Investors Have Been Able to Acquire Securities Without Full Rights, Which i View as Similar to Holding An Exclusive Non-Fungibible Token Grants. Imagine Owning A Cryptopunk But Not Having Access to The Punkdao and The Venture Opportunities Available To Holders.

NASDAQ is essentially trying to prevent investors from getting shortchanged. This is a major Benefit Because You Are Not Just Getting Access to A More Dynamic But Limited Version of the Asset – You’re Still Getting All of the Perks. WHEN I THINK OF THE DAPTENTIAL HERE, IT’S EXCITING – IMAGINE FULLY FLEDGED STES WITH 24/7 Trading, Lower Fees, and Significantly Shorter Settlement Times.

– Lynnnnnnnnnn, CEO, SAROS

KEEP READING

  • Blackrock’s Spot etf Ibit Nows for in-Kind Creation and Redemptions of Bitcoin.
  • Canadian Royal Mouned Police have Disaneled A Crypto Trading Platform Along with A Seizure of Over $ 56 Million for Operation Illegally.
  • The Bank of England Governer Has stated the Stablecoins Could Form A Major Shift in the Banking System.
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