Is Crypto Lending a Good Idea?
Crypto lending is not “rocket science”, if you know what you are doing.
Interesting times are ahead, as a result, most likely followed by the industry consolidation. What’s happening is not a Black Swan. It’s mainly self-inflicted and totally unrelated to the novelty of the exotic assets.
The troubles are not result of intrinsic characteristics of crypto itself.
Rather, they are caused by handling of the mundane “phenomena” so well-known from TradFi, like:
- Volatility
- Leverage
- Liquidity
- Credit
The ongoing drama of some of the leading crypto lenders takes front seat to crypto miners, some of which are also under stress:
“$4B in bitcoin mining loans are in distress — according to JPMorgan research.”
Of course, it didn’t have to happen. Furthermore, those who were innovative and didn’t link their funding to crypto alone or high leverage, are likely to be in a superior competitive position and more resilient to price volatility.
We live in interesting times and crypto just makes it more fun.
Written by Miroslav Visic
Structured finance background with leading investment banks: Morgan Stanley, Deutsche Bank and Guggenheim Partners. Experienced in credit solutions, deal origination, in addition structuring. Expertise in mortgages, ABS and CLOs.
Developed a global network of senior relationships with investors and issuers.
Focused on early-stage financing for emerging companies transitioning from the private funding to accessing the capital markets via securitization, venture capital debt, in addition crypto lending. Moreover, digital assets and other financial instruments.
Previously, focused on capital markets solutions and strategy for a life insurance specialty finance lending platform and arranging the insurance linked ABS.
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