Singapore-based derivatives trading platform Bitget is set to launch a cryptocurrency lending program that allows users to stake their coins in exchange for loans in different digital assets. The platform aims to cater to borrowers who are dissatisfied with traditional lenders and provide them with the opportunity to expand their investment portfolios beyond their current holdings.
Bitget says the program will be flexible for users
Bitget’s managing director, Gracy Chen, highlighted the flexibility and enhanced capital utilization that the loan program offers. By allowing users to stake less-demanded coins, borrowers can obtain loans in more liquid assets, which can be used for investment purposes.
The Crypto Loans program by Bitget enables borrowers to utilize their cryptocurrency holdings as collateral and receive loans denominated in other coins. Each loan comes with a specific interest rate, and the borrowable amount is determined based on the market value of the staked collateral.
The move by Bitget comes at a time when the digital lending market is experiencing significant growth. Reports from Allied Market Research and Global Market Insights project substantial expansion in the sector, with market values estimated to reach $71.8 billion and $60 billion, respectively, by 2032.
Digital lending offers advantages over traditional lending, including faster decision-making processes that can be completed in a matter of days rather than weeks. However, it also comes with risks such as hacking and fraud, as highlighted in a report by the U.S. Government Accountability Office in March 2023.
The platform wants to dominate the lending market
While the digital lending industry has faced setbacks, including high-profile failures such as Celsius, FTX, BlockFi, and Genesis, there have also been success stories. Fidelity’s partnership with crypto lender Nexo and Nexo’s efforts to avoid risky loans after Celsius’s bankruptcy demonstrate the potential for success in the crypto lending space.
Bitget emphasizes that it has modeled its onboarding process on established procedures used by traditional lenders. The platform also assures borrowers that it has measures in place to protect their collateral from risks and maintains proper accounting of its holdings.
In March, Bitget announced a partnership with Space and Time (SxT) to develop a decentralized data warehouse that provides a verifiably tamperproof audit trail. Additionally, the platform has implemented a “proof of reserves” section on its site to enhance transparency and provide better visibility into the assets it holds.
By launching its cryptocurrency lending program, Bitget aims to capitalize on the growing demand for digital lending services and provide users with a platform to leverage their crypto assets for investment purposes. The flexibility and increased capital utilization offered by the program align with the evolving landscape of the digital lending market, allowing borrowers to unlock the potential of their cryptocurrency holdings.
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