BlockFi has announced a new offer that will allow the giant Fidelity to provide lending services and use Bitcoin as collateral.
— BlockFi (@BlockFi) December 9, 2020
Fidelity offers its clients, mostly enterprise clients, security, trading and support services for digital assets, and is one of the largest financial services providers in the world, managing over $8.7 trillion of its clients.
BlockFi, on the other hand, was founded in 2017 to give its users access to financial products they would not otherwise have had access to. One of the strengths of this company is the interest earned on the crypto assets that users deposit using this service, locking them for a certain period of time, for example, by locking 1 BTC for 48 months, the total interest comes to just under $5,000.
Returning to the news, Fidelity has entrusted BlockFi to provide its customers with this type of loans using crypto, to be precise using Bitcoin, as collateral to receive fiat and spend them as the user wishes.
This service has been requested by many as it is already available in decentralized finance (DeFi) thanks to various protocols and on different blockchains. In fact, the macro category in which this type of instrument falls is called lending and borrowing, where we find on the one hand those who lend their cryptocurrencies in exchange for interest, and on the other those who borrow cryptocurrencies paying interest (an area widely explained in the book Mastering DeFi).
Fidelity and BlockFi together for Bitcoin lending
This collaboration therefore sees two important operators, who among other things boast a high level of security over the custody of users’ funds, as noted by BlockFi’s CEO, Zac Prince:
“We’re thrilled to be collaborating with Fidelity Digital Assets to help facilitate capital efficiency within their robust digital asset management platform. Having an ability to finance positions is a critical component of financial services infrastructure and this collaboration reflects an exciting development for the digital asset ecosystem”.
This is just the natural evolution of a service that Fidelity provides to its users, already last year Fidelity had a partnership with BlockFi for interest-bearing accounts.
Fidelity’s head of sales and marketing for digital assets, Christine Sandler, commented:
“We continue to see demand for increased capital efficiency from institutions that maintain long bitcoin positions, and with this collateral agent capability, our customers seeking that efficiency can access more opportunity with the capital that they trust us to keep safe. For Fidelity Digital Assets, this is an exciting first step into supporting the thriving lending market for digital assets and deepens our relationships within the digital assets ecosystem with leading firms like BlockFi, which allows us to provide even more institutional-grade solutions to investors in this space.”
As far as BlockFi is concerned, we know that Morgan Creek has invested $50 million in this platform.