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Atomic Capital, an badet creation start – up created last year, is entering the encrypted lending business with a seemingly aggressive lending offer.
Announced Wednesday, the New York-based company will offer loans in US dollars up to 85% of the value of bitcoin or ether given as collateral, which seems to be the most generous loan-to-value rate available on the market. market. market.
To put this number in perspective, BlockFi offers encrypted loans with a maximum LTV of 50%, which means you can only borrow half of the value of your crypto.
Another crypto lender, Celsius Network, offers customers LTV options of 25, 33 or 50%, with interest rates rising accordingly. SALT Lending, meanwhile, offers loans with LTVs of 30 to 70%.
A higher LTV ratio means that the lender is less protected against a sudden drop in the value of the collateral. But to offset the additional risk, Atomic will apply interest rates ranging from 11% to 13%, which is significantly higher than the rates of 4.5% to 8.95% imposed by competitors.
The company has announced that it will arrange these borrowings for amounts ranging from $ 100,000 to $ 100 million as of April 9. Although the high fork of this fork may seem far-fetched, Alexander Blum, CEO of Atomic, says the company has already asked for $ 80 million. the value of the loans.
Blum says its experienced start-up team, made up of former Deloitte, PwC and other well-known companies, believes a 85% solvency product is sustainable and will remain competitive in the environment current. "We are very confident that we can succeed," he told CoinDesk.
Brokerage loans
Atomic Capital raised $ 3.4 million for a Security Tokens Offering (STO) in October and $ 250,000 for Baroda Capital as a start-up investment. However, these funds will not be used to make the loans.
Indeed, Atomic will not finance the loans themselves, but will negotiate on behalf of Lockwood Group, a Luxembourg investment company that will badume the risks and will ensure the custody of the crypto guarantee of the borrower.
"We will be a trusted third party regulated in the United States, "Blum told CoinDesk, explaining that Atomic Capital would provide the technology side of the product.
In terms of the nature of this regulation, Mr. Blum stated that "Atomic Capital's FINRA-accredited dealer team operates as a broker", LoHi Securities, in Denver.
Touched by CoinDesk, Bobbi J. Babitz, a LoHi partner, confirmed the relationship. "We are an independent broker who is familiar with the regulatory requirements badociated with investing digital badets," she said.
In the United States, non-bank loans are generally regulated at the state level. But Blum told CoinDesk that since Lockwood, not Atomic, provides the loans, Atomic Capital does not need state-loan licenses. An Atomic spokesperson said the loans would be available throughout the United States, provided the customer issues "Know Your Customer" and "Money Laundering" checks.
Mark Klein, chief executive of Lockwood Group, said in a press release that his company "is badociated with Atomic because of its strong network of global investors and its leading position in digital investments in the fields of technology, finance and regulation ".
Borrower Beware
It is unclear whether Lockwood will keep crypto customers in cold storage (offline), in a hot wallet (online), in cryptocurrency exchanges or in a combination of both. The companies also did not indicate whether Lockwood would exchange or lend customers' crypto custody or provide a copy of the loan terms and conditions.
Blum sent most of CoinDesk's questions on these questions to Klein, who did not respond within the time constraints.
But if customer encryption is lost, Lockwood will be responsible, said Blum:
"The loss of cryptocurrency while she was in Lockwood 's custody, whether because of poor business transactions or a type of cybersecurity failure, did not help. did not absolve Lockwood of its legal obligation to a borrower to return the guarantee in a timely manner. Atomic is comfortable with this because of the strong experience of its global team of financial professionals and its large capital reserves.
In case Bitcoin or Ether would lower the price and the guarantee would lose value, Lockwood would be able to make margin calls, although companies do not stipulate the precise conditions for doing so.
"In accordance with the usual secured loan process, borrowers cede responsibility to the lender for the duration of the loan and sub-guaranteed loans must be reduced to acceptable loan ratios to remain in good standing in accordance with the terms of the contract", Klein told CoinDesk in a message relayed by Atomic's spokesperson.
In general, speaking of credit risks related to a notoriously volatile badet, Mr. Blum said: "Volatility, for those who know how to trade, is the best environment: the market can evolve in any direction and you you can always succeed if you can. trade with competence. "
Custody options will also be at Lockwood's discretion, he said:
"It's the nature of the deal, you give up custody and in exchange, you get a cash loan."
Loan image via Shutterstock.
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