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.
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
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.