BitGo launches a Bitcoin lending service, already has $150m in open loans

By: Ali Raza
Ali Raza
Ali plays a key role in the cryptocurrency news team. He loves travelling during his spare time and enjoys… read more.
on Mar 5, 2020
Updated: Mar 11, 2020
  • Crypto custodian BitGo recently introduced its new lending service for major investors.
  • The service comes due to a large demand in the area, as traditional banks continue to evade the crypto industry.
  • The service already offers BTC, as well as a number of largest altcoins, but also fiat currencies.

One of the world’s oldest and largest cryptocurrency custodians, BitGo, has recently announced a new service — crypto lending. The service offers Bitcoin and other digital coins to big investors, which has become a fast-growing sphere of crypto business.

The Palo Alto firm announced that it already racked up around $150 million in loans after it started testing the service several months ago. This was confirmed by Nick Carni, a former executive from Deutsche Bank, who is in charge of overseeing BitGo’s new service as the head of financial services.

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As mentioned, the new service is currently targeting only BitGo’s existing clients, as the company’s statement revealed. As for the coins available for lending, BitGo is offering Bitcoin, Ethereum, Litecoins, as well as stablecoins. The company will also lend fiat currencies, such as the USD, to investors who agree to post cryptos as collateral.

Why is BitGo offering crypto lending?

With the banks still mostly avoiding the crypto industry, a new type of lenders is filling the void that emerged due to the lack of the banks’ services in the area. Meanwhile, the demand is growing almost with every passing day, partly due to investors who wish to increase returns on their trading with leverage.

The crypto lending model will work similarly to the one used by traditional banks, where clients would take in the assets from depositors, and pay back the interest, and make loans at a higher interest rate. Meanwhile, the lenders can seize the collateral if the borrower fails to pay back their due in time.

BitGo’s decision to make the new push seemingly comes as crypto lenders started reporting runaway growth when compared to traditional banks. One example is Genesis Trading, which is owned by Digital Currency Group. In January of this year, Genesis Trading reported that its lending book surged by 21% in Q4 2019, reaching $545 million due to demand.

The growth was reportedly 10 times faster than that of the US’ largest bank, JPMorgan, which saw loan balance increase by only 2%.

Meanwhile, Digital Currency Group is one of the BitGo investors, where others include Goldman Sachs, Galaxy Digital Ventures, and others.

BitGo also recently announced plans to purchase blockchain startup Harbor, known for a failed attempt to tokenize $20 million worth of shares in South Carolina in 2019.

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