It’s telling that the person managing $9 billion in outstanding loans says that Bitcoin is one of the best forms of collateral across all types of debt instruments.
That’s according to — among sources Crypto Investor spoke to for this story — Matt Ballensweig, head of institutional lending for crypto trading firm and prime broker Genesis. And unlike something like a house or vehicle, Ballensweig said, volatility is easier to stomach because Bitcoin can and does appreciate in value.
“If you really think about traditional lending against collateral, it might be against a house, it might be against intangible assets like property, it might be against other securities or illiquid, fixed income instruments,” Ballensweig. “With bitcoin as a collateral asset, yes that value is going to move around relative to the underlying value of the loan, but it’s highly liquid.”
Genesis represents one of the larger players in the rapidly growing institutional crypto lending market. The field also includes DeFi protocols like Aave, MakerDAO, Compound and newcomer Maple Finance, which launched its decentralized corporate credit market in May. The New Jersey-based operation has already seen its inaugural liquidity pool grow from $17 million to $37 million.
The institutional lending desk at Genesis, which launched in 2018, has grown into a 40-person team – making up almost a third of the whole Genesis headcount – with roughly $9 billion of active loans outstanding to 300 hedge funds, high net worth individuals, mutual funds and family offices.
The staff has Wall Street credentials, too. Ballensweig, for example, joined Genesis four years ago after having worked as a senior analyst at Bridgewater Associates and Fidelity Investments.
The Genesis desk lends out a mix of Bitcoin, U.S. dollars and stable coins — plus about 35 other digital assets to clients, most of whom are U.S.-based. But overseas clients account for about one-third of Gensis’s lending business, with especially high demand coming from Asia, and that segment has been growing.
The company recently, in fact, established an office in Singapore and just this month named Satbir Walia as its regional director of Asia Pacific. Ballensweig said the company is continuing to build out the team there “to have boots on the ground and increase our presence.”
“There’s a lot more institutional interest now, in terms of lending dollars against Bitcoin, from large trading firms and banks that weren’t really active in the lending market about a year ago,” he said. “Another theme is the continued interest in borrowing USDC and other stable coin to arbitrage futures versus stock market.”
Ballensweig said Gensis has a credit facility with Silvergate Bank and has been in talks with its rival, Signature Bank, to do the same there. Silvergate Bank has been rolling out a booming book of crypto-based lending.