The first quarter saw more than $690 million in loan processing for cryptocurrency lending startup Ledn, making it the company’s most successful quarter since its founding in 2018. That amount is over five times higher than the preceding three months’ total.More than 84% of the transactions were aimed towards institutions, and demand skyrocketed following the U.S. acceptance of spot bitcoin (BTC) exchange-traded funds (ETFs) in January, when loans totaling several hundred million dollars were given to ETF market makers, according to a news release from Ledn.Ninety percent of the $140.3 million in loans that the company made in the fourth quarter of 2023 went to institutional borrowers.
“The first quarter of 2024 has set the tone for a promising year for Ledn, as we’ve not only doubled our loan book since November 2022 but have also solidified our leading position in the market by adapting to the increasing demand for digital asset financial products,” CEO Adam Reeds said in a statement.
Along with declining asset values, the cryptocurrency lending industry collapsed in 2022, forcing lenders including Celsius, BlockFi, and Genesis to declare bankruptcy.Only now are centralized lenders like Ledn beginning to recover from the bad publicity surrounding their failure.Meanwhile, lending in decentralized finance (DeFi) grew even more, as companies like Aave amassed $10 billion in total value locked (TVL).The company launched a cryptocurrency-backed loan product in December that enables borrowers to obtain a loan by offering cryptocurrency as security, which BitGo will then hold.
Loans to institutional clients increased to $399 million in the fourth quarter of 2023, according to Coinbase (COIN), a cryptocurrency exchange.That predates the approval of the ETFs.Ledn reported that it lent $100 million to retail clients in Q1, $40 million of which came from the financing of Celsius’s failure.The company introduced a loan product in December that is backed by cryptocurrency and enables borrowers to obtain a loan by offering cryptocurrency as security, which BitGo will then hold.