Genesis Global’s crypto asset lendings, now over half a billion dollars

Oct 19, 2018 at 19:23

Genesis Capital, a cryptocurrency lender for institutions, said total borrowings and loans since its launch in March totaled $553 million.

In its report titled “2018 Q3 Digital Asset Lending Snapshot,” the New-York based firm said loans took up the lion’s share of the originations with $327 million.

Tracking loans are borrowings with $226 million and active loans outstanding with $130 million.

All these derive from over 60 institutional counterparties across the world.

“Over the past year, through client feedback and the rise of derivative marketplaces, we saw a meaningful increase in the number of market participants wanting to borrow and/or lend digital currencies. We built this new business segment to meet those demands and have experienced an incredibly strong reception since our launch,” Genesis Capital said in the report

Genesis Capital’s clients are all institutional which include hedge funds, trading firms, and companies that use digital currencies.

In the report, Genesis Capital described the borrowing behavior of these three: hedge funds, harboring “thesis-driven views on assets, borrow to short for prolonged periods; trading firms, on the other hand, borrow “to quickly arbitrage discrepancies in the market and avoid directional risk”; while-crypto focused firms borrow as a means of using thes digital assets as working capital “to scale their businesses, such as remittance payments to customers.”

“Early in the quarter, working capital drove the majority of loans. In September, however, hedge funds became more active on the short-side and added to their speculative long-term positions. Trading firms also saw increased opportunities for arbitrage and market-making as derivative liquidity increased across markets,” Genesis Capital said.

“We believe this kind of activity will continue to pick up as derivative markets mature,” it added.

On the coin types, the preference of institutions diversified from just being concentrated on two namely Bitcoin (BTC) and Ethereum (ETH)— the waning interest on the latter mainly owed to its nearly 80% from March.

“As ETH short interest closed near the lows, we saw that interest shift to other alternative assets,” the lender added, citing LTC, XRP, ETC, and Bitcoin Cash.

Meanwhile, BTC purchases “remained consistent… as it is the most widely used asset for non-speculative reasons” such as for working capital in remittance and cross-exchange arbitrage trading, according to Genesis Capital.

Launched last March, Genesis Capital is the first institutional lending business that complements the OTC business of its parent firm, Genesis Global Trading, Inc. which is a pioneer in over-the-counter digital currency trading and a registered broker-dealer since 2013.