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Lendingblock is the first blockchain-powered securities lending exchange and it’s set to go live on 3 September.
It is fully-automated end-to-end and will offer loans for several cryptocurrencies, including Bitcoin, Etherium, Paxos Standard Token and Tether, which can be loaned on one-, seven-, 14- or 30-day terms. More marketplaces are expected to follow.
As part of its unique offering, the platform will offer anonymised data on the borrowing and lending activities of other users, such as the rates others are matching on, across all assets and terms.
According to Kelly Pettersen, Lendingblock’s chief marketing officer and head of business development, the exchange is seeking to do for the burgeoning crypto world of tomorrow what securities lending does for traditional markets today.
Despite blockchain-based innovations often being billed as ‘market disruptors’, Pettersen, believes this platform will be more complementary than competitive with the traditional securities lending market.
“Our team has come together to build out what we’re calling a scalable, commoditised borrowing and lending marketplace to allow institutional-type players in the crypto economy to be able to access digital assets in a new way,” she explained. "As my CEO likes to put it: there's not many times in your life you get an opportunity to re-invent something and make it your own."
The story so far
Lendingblock was founded in 2017 by its CEO Steve Swain, a former partner at Deloitte, and Linda Wang who also brings experience from Deloitte as a technical consultant, as well as being the CEO and co-founder of LENDR, a digital mortgage adviser.
The Gibraltar-based company has spent the past year-and-a-half on-boarding institutional clients, including hedge funds that are moving into crypto and other crypto-focused funds, along with exchanges that are sitting on digital assets that could be earning additional revenue from lending.
New digital-custodians are also emerging and seeking to move from simply being a wallet for digital assets to offering services similar to traditional securities lending or hypothecation that Lendingblock is targeting as users of its trading platform.
According to Pettersen, Lendingblock has a comprehensive onboarding process that includes a new legal contract that has been customised for the digital economy and is based on the Global Master Securities Lending Agreement, known as a Global Digital Assets Lending Agreement.
Following several announcements on technology-milestone achievements
and new partnerships with the likes of Caspian and Chainalysis, among others, over the past year, Lendingblock secured its full licence as a distributed ledger technology provider from the Gibraltar Financial Services Commission earlier this month.
With its first licence inked, Pettersen said that Lendingblock is now focused on gaining licences in the US and the UK, where the majority of its current clients are based.
Day one and beyond
Lendingblock has on-boarded 30 clients ahead of its launch, including what Pettersen describes as “some of the bigger over-the-counter players in the crypto market”. Pettersen says that half of these are in the US, with another 30 percent in Asia and the remainder in Europe.
Beyond its initial launch, Pettersen outlined that users can expect new assets to be added, including the ability to execute rolling loans and new partnerships with custodians to better service their clients.
Into the weeds
The Lendingblock business model will see it take a basis point fee from the borrower and lending for origination. At the same time, Pettersen explains that as these loans are considered peer-to-peer, Lendingblock will sit in the middle of each loan to act as a trustee and take responsibility for managing any collateral, for which there will also be a percentage-based fee.
