The recent collapse in cryptocurrency prices may have hit the industry hard, but one vital sector is remaining strong: crypto lending.
According to a recent report from Bloomberg, crypto lenders are “finding strong demand from borrowers who don’t want to sell their virtual coins at depressed prices, as well as from big investors eager to borrow coins for short selling.” In other words, dedicated users and total skeptics alike are keeping this industry booming.
Bloomberg listed several remarkable examples from this trend, noting that the cryptocurrency lending firm Blockfi, “says its revenues and customer base have grown 10-fold since June,” while British-based ETHLend is planning to expand operations into the U.S. and Salt Lending has seen revenues tick steadily upward.
Crypto lender Genesis Capital, for example, only launched in March and yet has already issued $700 million worth of loans. Its CEO, Michael Moro, claimed that “the bear market has certainly helped — at least has fueled the growth.”
As prices become more and more unstable, lenders are able to demand larger amounts of collateral to secure loans. As Blockfi’s CEO Zac Prince noted, customers typically “deposit $10,000 of digital coins to take out $5,000 in fiat.”
The low-risk environment created by these loans has given crypto lenders opportunities to expand in the world. Prince told Bloomberg that “from a consumer perspective, we will start to look like a diversified fintech company — that started with loans.”
Offering other credit products, several such companies are poised to make critical expansion while their business is still booming.