BlockFi and Fidelity for loans with Bitcoin
BlockFi has announced the new offer that will allow the giant Fidelity to provide loans and use Bitcoin as collateral.
We’re excited to announce that BlockFi can now offer USD loans to institutional clients holding Bitcoin as collateral in custody accounts at @DigitalAssets. Learn more: https://t.co/ArvkoVzEMW
– BlockFi (@BlockFi) December 9, 2020
Fidelity offers its clients, mostly enterprise clients, security, trading and support services for digital assets, and Bitcoin Circuit is one of the largest financial services providers in the world, managing over $8.7 trillion of its clients.
BlockFi, on the other hand, was founded in 2017 to give its customers access to financial products they would not otherwise have had access to. One of the strengths of this company is the interest on deposits that users have put their cryptos into this service, blocking them for a certain period of time, for example by blocking 1 BTC for 48 months, the total interest comes to just under $5,000.
Returning to the news, Fidelity has trusted BlockFi to provide its customers with this type of loans using crypto, to be precise using Bitcoin, as collateral to receive fiat and spend it as the user wishes.
This service has been requested by many as it is already available in decentralised finance (DeFi) thanks to various protocols and on different blockchain. In fact, the macro category in which this type of instrument falls is called lending and borrowing, where we find on the one hand those who lend their cryptos in exchange for interest, and on the other those who borrow cryptos paying interest (an area widely explained in the book Mastering DeFi).
Fidelity and BlockFi together for Bitcoin loans
This collaboration therefore sees two important operators, who among other things boast a high level of security over the custody of users‘ funds, as BlockFi’s CEO, Zac Prince, pointed out:
„We are excited to partner with Fidelity Digital Assets to help facilitate capital efficiency within their reliable digital asset management platform. Having the ability to finance positions is a critical component of the financial services infrastructure and this collaboration reflects an exciting development for the digital asset ecosystem.
But this is just the natural evolution of a service that Fidelity provides to its users, remember that last year Fidelity had already partnered with BlockFi on accounts with interests.
Fidelity’s head of sales and marketing for digital assets, Christine Sandler, commented:
„We continue to see a demand for greater capital efficiency from institutions that have long positions on bitcoin, and with this ability to broker collateral, our clients seeking that efficiency can access more opportunities with the capital they trust us to keep it safe. For Fidelity Digital Assets, this is an exciting first step to support the thriving digital asset lending market and deepen our relationships within the digital asset ecosystem with leading companies such as BlockFi, enabling us to provide even higher institutional level solutions to investors in this space.
Fidelity itself has always defended Bitcoin from criticism and will soon be ready to offer another important asset such as Ethereum (ETH), showing an openness to other assets.