Financial services provider Dominion Capital has announced that its customers can now apply for loans against their crypto holdings. Initially, the family office based in the New York City will consider only applications that list bitcoin as collateral.
However, the company has vowed to extend this service to other cryptocurrencies as well if/when it finds the product-market fit.Dominion explains the move by saying that the time is ripe to establish bitcoin’s worth as an asset by broadening its services.
“Community is a huge part of this movement, …One of the tests of whether assets are legitimate is if people are willing to lend against them,” said Mikhail Gurevich, Chief Executive at Dominion Capital.
One of the often-ignored facts while discussing growing crypto investment figures worldwide is that a significant proportion of investors out there have tread so deep into the crypto market that they are now crypto-rich, yet cash-poor. Granted, these people always have the option to sell off parts of their crypto stash if push comes to shove.
But even under the best of circumstances, it can be a cumbersome task to sell large amounts of digital currency at a short notice. Not to mention the fact that most investors would find it excruciatingly hard to part ways with their crypto assets for short-term needs — more so when the market is showing potential.
And now Dominion enters into the scene. The company’s offering is designed to allow investors borrow cash against their own crypto assets.
Gurevich is optimistic that apart from retail customers, Dominion’s offering could also aid all those ICOs that managed to raise assets worth millions of dollars but have been left stranded since because of the difficulties with liquidating the fund.
Dominion is currently focusing on its ongoing Series-A funding round which, it hopes, will add another $5 million to the company’s means. If everything goes as per plan, it plans on further developing the company’s services in addition to expanding the workforce.
Not just that, Dominion has also set itself a target of $100 million in the next round. The company says if it achieves that goal, the additional fund will be utilized to finance more loans.
“We think there could be a lot of interest for this type of product in the current yield-starved debt markets,” the Dominion CEO said on an optimistic note.
While the specifics still need some working, Gurevich and his team are expecting to lend at nearly 50 percent of the value of the asset. There will be specific provisions to minimize the fall out from an unexpected drop in the value of the collateral asset.
Feature image by Sebastian Abboud