Institutional lending sector sees collaboration between BlockFi and Fidelity Investments to introduce Bitcoin loan services.

Fidelity Investments, a multinational financial institution, continues to expand its presence in the cryptocurrency field. Its cryptocurrency digital asset department, Fidelity Digital Assets (FDAS), has been growing steadily. In addition to providing institutional custody and trading services, it announced a partnership with lending platform BlockFi yesterday (12/9) to introduce a Bitcoin collateral feature.

Loan-to-Value Ratio Reaches 60%

According to an official announcement from BlockFi,news, institutional users of Fidelity Digital Assets' custody accounts can now use Bitcoin as collateral to access loans through BlockFi, with the loan functionality being integrated with Fidelity's trading platform. Zac Prince, the founder of BlockFi, stated:

We are excited to collaborate with Fidelity Digital Assets and help enhance the capital efficiency within their digital asset management platform. The ability to finance assets is a critical part of the infrastructure, and this partnership reflects the positive trend in the development of the digital asset ecosystem.

The article points out that Fidelity institutional users will still need a BlockFi account to access this feature, and the Bitcoin volatility and collateral ratio will be managed by BlockFi, with the loan amount equivalent to 60% of the collateral value. Fidelity anticipates that the main institutional users of the loans will be hedge funds, cryptocurrency miners, and over-the-counter traders.

CeFi Comparison: Coinbase LTV Ratio at Only 30%

In August of this year, the U.S. exchange giant Coinbase also launched its lending service, but perhaps due to targeting general users, users can only borrow up to 30% of their total Bitcoin holdings, with a maximum limit of $20,000, at an 8% interest rate for a maximum period of one year, expected to be launched in the third quarter of this year.

With the bull market driving momentum, BlockFi has been actively promoting platform development this year, not only recruiting traditional financial professionals but also planning to go public in the second half of 2021. Its latest product is a Bitcoin rewards credit card issued in collaboration with Visa, expected to be launched in early 2021.

Fidelity Investments, on the other hand, is one of the few traditional financial institutions that continue to have a positive outlook on cryptocurrency assets, involved in areas including crypto custody, trading services, and Bitcoin mining. In April of this year, they also collaborated with the cryptocurrency exchange ErisX to deepen their trading liquidity, and have previously claimed that Bitcoin is an "ideal store of value."