Institutions Taking Crypto Loans from Genesis for Spot Trading

The company also said that its lending services were used by firms to meet short-term obligations

The bearish cryptocurrency market may have some traders down in the dumps but, for cryptocurrency exchange operator Genesis, things haven’t been all bad.

As our highly knowledgeable base of readers will know, the company has also been providing cryptocurrency loans for some time now.

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And, in the last quarter of 2018, the firm managed to double the number of loans it was providing. In total, the firm provided $1.1 billion in loans over the course of 2018.

The massive uptick in that final quarter was presumed to be a result of people shorting Bitcoin as its price continued to tank.

According to research by Diar, however, that’s not entirely accurate.

The digital asset intelligence firm said that 50 percent of the loans provided by Genesis Capital, the exchange’s institutional and lending arm, were used for different reasons.

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Spot trading and liabilities

Most notably, the institutions taking out the loans used the cryptocurrency provided to them for spot trading activities and, for cryptocurrency firms, to meet short term payment obligations in Bitcoin.

In fact, of all the cryptocurrency lent to institutions by Genesis in the last quarter of 2018, only 10 percent was used to short the Bitcoin market.

Along with the tremendous growth that the exchange saw in its cryptocurrency lending business, Genesis also saw a big uptick in the number of fiat currency loans it provides.

Fiat loans were introduced by the company in the final quarter of last year. Someone that wants to take a loan from the exchange operator has to use cryptocurrency as collateral.

Currently only open to accredited investors, the company handed out $20 million in loans in the final three months of 2018.

“In response to client demand to borrow USD against crypto collateral, we launched a cash lending pilot program,” said the company in a statement last week. “The reception has been quite strong and we have decided to officially launch the new fiat currency lending business.”

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