Galaxy Digital Issues Multimillion-dollar Loan Against Tokenized Stradivarius Violin

Galaxy Digital Holdings LP, led by Michael Novogratz, has issued a multimillion-dollar loan against a unique asset — a 1708 Stradivarius violin.

The loan was granted to Yat Siu, co-founder of Animoca Brands. Last year, Siu purchased the rare violin at auction for over $9 million.

“This is only the beginning of the potential of RWAs”, Siu said. “And the initial collateralization is just the beginning of this journey for both the Empress Caterina and for any other future unique and special RWAs.”

“Tokenizing physical assets like fine art or musical instruments allows better loan terms compared to volatile assets like Bitcoin or Ethereum,” said Thomas Cowan, Galaxy Digital’s Vice President of Tokenization. “Today it’s a violin, but tomorrow it could be real estate.”

Both the physical violin and its digital representation in the form of a nonfungible token (NFT) are being used as collateral. The physical instrument will be kept by a custodian in Hong Kong, and neither party has disclosed the exact loan amount, only stating that it is “in the millions.”

Tokenization is the process of converting a physical asset into a digital token on a blockchain.

The Stradivarius violin, crafted in 1708, has a rich history. Initially acquired for Empress Elisabeth Petrovna of Russia, it was later owned by Catherine the Great. Violin auction house Tarisio confirmed its provenance.

Siu said he might use the loan to explore new investments in cryptocurrency projects or art. He is also considering allowing others to invest in the tokenized violin through fractional ownership, although no concrete plans exist yet.

Galaxy Digital reported strong numbers for the first quarter of 2024. Notably, the company’s equity capital reached $2.2 billion as of March 31, representing a $402 million increase from the previous quarter.

The firm achieved record Bitcoin mining revenue of $31.5 million, with its Hashrate Under Management reaching 5.7 exahashes per second.

Meanwhile, the company’s average loan book size was reported at $664 million in the first quarter of 2024, a 5% increase from the previous quarter.