New York-based startup BlockFi, which provides loans to crypto-asset owners using their bitcoin and ether holdings as collateral, has secured $1.55 million in a just-closed funding round.
The company, which received backing from ConsenSys Ventures, SoFi and Kenetic Capital among others, wants to "bridge the gap" between capital markets and the cryptocurrency ecosystem, according to a press release. In doing so, the company expects to tap into a market of new investors who need to borrow funds.
While the company does deal with crypto assets, it otherwise functions as any other lender would: clients' cryptoassets are held by a registered custodian and loan performance data is reported to the major credit bureaus to update borrowers' credit scores.
BlockFi chief executive Zac Prince said the existence of crypto assets has opened up new opportunities in lending, according to the statement.
"By bringing institutional quality technology infrastructure, data science, risk management and operations to the cryptoasset market, we aim to be the leading lender in the cryptoasset market and a leading provider of low cost credit globally."
The company will initially operate in 35 U.S. states, lending to individuals, companies and institutions.
BlockFi's mission will help reduce volatility in the crypto asset market, said ConsenSys managing partner Kavita Gupta.
"This market needs access to debt beyond fragmented, short term margin trading options in order to reduce volatility, facilitate scale and put the financial infrastructure for this ecosystem on par with other asset classes," she said.
Coins image via Shutterstock