Ledn Secures $50 Million Bitcoin-Backed Loan From Sygnum

Crypto collateralized lending is taking off outside of DeFi.

On Aug. 20, Ledn, a CeFi digital asset lending platform, announced it had borrowed $50 million from Sygnum, a Swiss digital asset bank, via a loan backed by Bitcoin.

The loan is syndicated by Sygnum’s institutional clients, with Ledn describing the deal as the first Bitcoin-backed syndicated loan. A syndicated loan is provided by a group of lenders who work together to offer funds to a single borrower. Syndicated loans are often used in the context of loans that are considered to be too large or too risky for one lender to service alone.

“Partnering with Sygnum to secure the first Bitcoin-backed syndicated loan facility is a landmark achievement for Ledn,” said John Glover, Ledn’s chief investment officer.

Ledn said it will use the loan to expand its retail lending operations.

Ledn and Sygnum grow

Ledn offers Bitcoin-backed loans to both retail and institutional users. Ledn’s loans are issued at a maximum loan-to-value (LTV) ratio of 50%, must be collateralized by at least $1,000 worth of BTC, and offer interest rates starting at 11.4%.

Ledn recently reported that it originated more than $1.16 billion in digital asset loans during the first half of 2024, with loans to institutional clients making up $969 million or 83.5% of the total. The company attributed its strong performance to Bitcoin halving and the launch of Bitcoin and Ether exchange-traded funds (ETFs).

Ledn’s retail loans also recorded a substantial increase of 29.8% to $85 million in the second quarter from $65.5 million in the first quarter.

Sygnum manages approximately $4.5 billion in client assets. Last month, the firm reported profitability during the first half of 2024 after hosting a 500% surge in crypto derivatives trading and a 360% increase in loan volume.

The bank’s core equity capital now exceeds $125 million, following a successful $40 million funding round that valued the company at around $900 million in January. Sygnum is also expanding its presence in the European Union (EU) market, complying with the region’s Markets in Crypto-Assets (MiCA) regulation.

Ledn expands into Próspera

On Aug. 1, Ledn announced it would provide Bitcoin-backed loans to residents in Próspera, a special economic zone on the Honduran island of Roatán.

In April 2022, Próspera officially recognized Bitcoin as legal tender allowing Bitcoin to be used for transactions, tax payments, and as a unit of account within the zone. The city’s governing council took inspiration from El Salvador recognizing Bitcoin as legal tender in September 2021.

Ledn’s provides Próspera residents with special rates on Bitcoin-backed loans for property purchases. The move comprised the first offering of Bitcoin-backed loans for real estate purchases within a special economic zone.

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