Nexo and Citigroup to explore consolidation of crypto lending space
- Nexo announced it’s working with Citigroup as it looks to explore opportunities to consolidate crypto lenders.
- Citigroup is to act as a financial advisor as Nexo proactively engages crypto market players.
- M&As could help build a sort of “lender of last resort” to help protect retail investors.
Nexo is working towards consolidation of the crypto lending space as different players explore how best to protect retail investors in the crypto market.
The leading crypto firm’s efforts have seen it engage banking giant Citigroup in what Nexo said in a press release was a bid to have Citi act as a financial advisor.
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The partnership will seek to explore strategic opportunities within the crypto lending space, the crypto platform added. For Nexo, this effort will see it tap into its investment arm Nexo Ventures’s extensive expertise to seek sector consolidation.
A lender of last resort
According to Nexo, the current crypto market turbulence has exposed the cracks in the space that has several enterprises teetering towards insolvency.
The lack of liquidity is clearly on display and the company feels having a “lender of last resort” – similar to that played by the Federal Reserve – would help crypto lenders and other sections of the blockchain industry.
But with no such “lender of last resort”, crypto’s best shot is to allow for solvent players to work towards mass consolidation via mergers and acquisitions (М&А).
Nexo co-founder Antoni Trenchev commented:
We have been approached by multiple Wall Street banks and decided to officially explore the opportunities for acquisition to help stabilize our nascent industry. At Nexo, we have long advocated for the implementation of prudent practices and sustainable business models in our industry, as a result of which the company has amassed a war chest of funds to be used in such aid deals.”
Nexo taking a proactive approach as it looks to spearhead effort
Several companies, including Celsius Network, Babel Finance and Three Arrows Capital have hit massive turbulence in the last few weeks amid the crypto sell-off. Others like Voyager Digital and BlockFi have taken on credit facilities to stabilize and protect customer assets.
Nexo says it’s proactively engaging market players affected by the crypto winter, but which have sound business structures for such acquisitions and mergers.
According to Nexo, consolidation would help the companies facing insolvency through provision of stability. However, and this is crucial, it is retail and other small investors that needs the protection of the market, especially in the event multiple crypto lenders fail to honor customer withdrawals.