The future of crypto lending with Ledn
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What
Ledn is a Canada-based financial services platform for bitcoin and other digital assets. It offers lending, savings, and trading products for customers in more than 130 countries. Founded in 2018, Ledn has secured more than $100M in venture funding, including a $70M Series B in December 2021 that saw participation from 10T Holdings, ParaFi, Kingsway Capital, and others.
Ledn’s bread-and-butter is its lending products. It underwrote Canada’s first bitcoin-backed loan in 2018, and has announced the launch of a bitcoin-backed mortgage in early 2023. Outside the US and Canada, it also offers B2X, through which Ledn extends loans to borrowers in exchange for double the cash value of crypto as collateral.
Why
According to Mauricio Di Bartolomeo, Co-Founder and CSO of Ledn, the crypto landscape in the US is moving into another regulatory phase. Di Bartolomeo said that, since other countries—such as France, the UAE, and Hong Kong—are openly courting crypto companies and talent, US regulators feel pressure to create a clearer (and potentially friendlier) legal landscape.
With Blackrock applying for a bitcoin spot ETF, and Jerome Powell saying that bitcoin has “staying power,” and platforms receiving regulatory licenses worldwide—including Ledn in the Cayman Islands—it appears the sector’s regulators are “correcting course,” Di Bartolomeo said.
How
If North American regulators become more comfortable with less traditional lending products—and, crucially, allow selling commodities with a loan—we should expect Ledn to expand its B2X offering into the region. “It’s our best-performing product and is what people love the most,” Di Bartolomeo said.
Of the $600M in loans that Ledn has extended since its founding, Di Bartolomeo said around 60% of those loans have been B2X loans versus more regular products.
B2X is a dollar loan backed by bitcoin, wherein borrowers lock up double the amount of bitcoin relative to the dollar value of the loan. The underwriting is based on passing Ledn’s KYC service and on living in a jurisdiction Ledn can service; there are no credit checks or other factors baked into the process.
Thereafter, customers receive their dollar loan within 24 hours. If the value of the collateral drops such that it becomes 80% of the outstanding value, then the system automatically sells enough Bitcoin to close the loan and return any balance over to the customer. In a worst-case scenario, Di Bartolomeo said, a client will have collateral sold to settle debts, and they receive a portion of their collateral back. As a result, there are no defaults, according to Di Bartolomeo.
Ledn anticipates continued demand for its lending products over the coming months and years. Especially for retail bitcoin holders in countries with unstable economies and difficult lending processes, Ledn’s products allow fast access to dollars with clear lending terms.
“Now I lend money to people in Colombia at the same speed and at the same rates as I lend to somebody in Belgium,” Di Bartolomeo said. “To me, that is a material change to the accessibility of financial products.”
