Crypto exchange Kraken’s new NFT marketplace to issue loans

December 28, 2021 Coin Telegraph

Jesse Powell said the exchange will expand into a marketplace for nonfungible tokens and NFT-backed loans beginning in 2022.

Kraken founder and CEO Jesse Powell recently shared in an interview with Bloomberg News that the crypto exchange will launch a nonfungible token (NFT) marketplace that will enable users to borrow funds against their NFTs.

Powell explained that the company plans to enter the NFT space in early 2022 and hopes to add the feature to determine the liquidation value of an NFT and if it can be put up as collateral for a loan.

“If you deposit a CryptoPunk on Kraken, we want to be able to reflect the value of that in your account," said Powell. "And if you want to borrow funds against that."

The value of NFTs, however, is all over the spectrum and only a small percentage of token owners hold a digital collectible valued for as much as a CryptoPunk, whose floor price is 66.9 Ether (ETH) or $273,673 at the time of publication.

According to Powell, NFT utility will explode next year:

“Phase one was speculation, phase two is buying art and supporting artists, phase three is going to be functional uses of NFTs.”

Additionally, Kraken recently acquired Staked, an infrastructure platform that allows for non-custodial crypto staking, in an effort to attract new investors. Kraken clients will now be able to earn crypto rewards and yield while retaining control over their digital assets.

Kraken was founded in 2011 and has become one of the largest crypto exchanges worldwide, ranking among the top in terms of average liquidity, volume and digital asset reserves, according to data from CoinMarketCap.

Kraken’s announcement demonstrates how NFT-backed loans are becoming increasingly commonplace as more DeFi platforms, such as Arcade and Nexo, are offering this new loan model. As Cointelegraph recently reported, Arcade closed a $15 million funding round in December as part of a broader effort to grow its offerings and attract more investors to its collateralized NFT platform.

Crypto Lender Nexo Launches NFT Lending Desk, Loans up to 20% for Popular NFTs

December 17, 2021 Bitcoin.com

Nexo partners with Three Arrows Capital to launch NFT lending & art financing service

December 16, 2021 Coin Telegraph

Coin Telegraph

Bored Ape Yacht Club and CryptoPunks NFTs are two of the options supported as collateral for crypto credit lines on the platform.

Nexo, the crypto borrowing and exchange platform, has launched an NFT Lending Desk in partnership with NFT hedge fund Three Arrows Capital. The new lending desk caters to over-the-counter, or OTC, clients to offer crypto credit backed by NFTs. Nexo is one of the first crypto lenders to allow customers to borrow stablecoins, ETH, and other cryptocurrencies using certain NFTs as collateral.

The company stated that in its initial iteration, the service will accept Bored Ape Yacht Club and CryptoPunks NFTs, with more collections on the way. Clients can also use issued lines of credit as a means of art financing by executing further NFT purchases with t borrowed funds.

In a statement shared with Cointelegraph, Nexo Cofounder and Managing Partner Antoni Trenchev said:

“Our partnership with Three Arrows Capital is a definitive move towards providing financial instruments & Web 3.0-native MetaFi. As we continue to discover the full scope of this asset class, services like Nexo’s lending will be in high demand to unlock NFTs’ underlying value while allowing users to retain ownership.”

By collaborating with Three Arrows Capital, Nexo said it hopes to expand its existing crypto credit issuance services by providing the NFT Lending Desk with risk hedging, valuation and liquidation mechanisms. Additionally, Three Arrows Capital became the first NFT Lending Desk client with an NFT-collateralized crypto credit issued by Nexo.

Three Arrows Capital Director Kyle Davies added that they are “happy to partner with Nexo and demonstrate our recognition of NFTs’ promise as a financial instrument – one that requires appropriate, high-quality financial tools to be fully leveraged.”

In the coming months, Nexo said it plans to increase its offerings of investment-grade products and accessible and secure exposure to the NFT market, according to the company.

As the NFT-backed lending market grows and NFT utility increases, other lending platforms such as NFTfi, ETNA Network and Drops Loans are also offering similar services to Nexo.

Coinbase Lets Customers Borrow up to $1 Million Using Bitcoin as Collateral

November 3, 2021 Bitcoin.com

Tether fires back against report it is using reserves for investments and making crypto-backed loans

October 7, 2021 Coin Telegraph

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"If those loans fail, even a small percentage of them, one Tether would become worth less than $1," said Bloomberg reporter Zeke Faux.

Tether (USDT), the largest stablecoin issuer by market capitalization, has refuted the details of a Bloomberg story on its reserves holdings.

In a Thursday report, Bloomberg journalist Zeke Faux made numerous claims against Tether, including that its chief financial officer Giancarlo Devasini has used the company’s reserves to make investments, that seem to contradict Tether’s public position that the holdings were fully backed at all times. In addition, Faux alleges that Tether has invested in Chinese firms and issued crypto-backed loans “worth billions of dollars.” According to the report, he was only able to confirm one bank in the Bahamas was working directly with Tether.

“Tether still hasn’t disclosed where it’s keeping its money,” said Faux. “If Devasini is taking enough risk to earn even a 1% return on Tether’s entire reserves, that would give him and his partners a $690 million annual profit. But if those loans fail, even a small percentage of them, one Tether would become worth less than $1.”

Tether called the report a “tired attempt” to undermine the company based on “innuendo and misinformation.” The stablecoin issuer challenged the credibility of Faux’s sources as an attempt “to discredit Giancarlo Devasini and Tether’s executives” and continued to claim its USDT tokens are “fully backed,” citing its quarterly assurance reports.

In February, Tether and Bitfinex agreed to pay New York state $18.5 million in damages and provide extensive reports on its finances as part of a settlement with the New York Attorney General’s Office — the most recent audit was filed with information reported as of June 30. Authorities had claimed Tether misrepresented the degree to which its USDT tokens were backed by fiat collateral.

The Bloomberg report comes as many speculate whether China’s second-largest property developer, Evergrande Group, will default on $300 billion in debts. According to Faux, Tether denied holding any debt from Evergrande but would not confirm whether it held commercial paper from other Chinese firms.

Silvergate Bank issues $100M credit line to mining firm Marathon Digital

October 4, 2021 Coin Telegraph

Silvergate Bank issues 0M credit line to mining firm Marathon Digital

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"We remain optimistic that we are well positioned to scale our hash rate to 13.3 EH/s by the middle of 2022,” said Marathon Digital CEO Fred Thiel.

Marathon Digital Holdings, a United States-based crypto mining company, has secured a $100 million revolving line of credit with Silvergate Bank using USD and Bitcoin.

According to information provided by Marathon Digital, the mining firm obtained the $100 million credit line from the crypto-friendly bank on Friday. The company will use the credit to purchase Bitcoin (BTC) mining equipment and fund its mining operations. Marathon Digital said it expects Silvergate to renew the revolving line of credit annually after the initial one-year arrangement.

In addition, Marathon Digital reported it had produced more than 1,252 BTC — roughly $59.5 million at the time of publication — during the third quarter of 2021, with 340.6 BTC minted in September alone— a 91% increase over Q2. The increase in Bitcoin production follows the firm acquisition of 26,960 ASIC mining machines from Bitmain, with an additional 8,459 miners expected soon. Its current operations produce a hashrate of roughly 2.7 EH/s.

“While the rate at which we receive miners has fluctuated and may continue to do so in the near-term, we remain optimistic that we are well-positioned to scale our hash rate to 13.3 EH/s by the middle of 2022,” said Marathon Digital CEO Fred Thiel.

Some major U.S. investment managers and financial services firms have purchased stakes in Marathon Digital, according to filings with the Securities and Exchange Commission. As of June 30, investment manager BlackRock owned a 6.71% stake in Marathon Digital, while Fidelity Investments purchased a 7.4% stake in the company for $20 million in July.

The increase in quarterly mining production could have been affected by reports of China cracking down on local miners as well as its consideration of regulatory actions on crypto. Crypto prices have likewise experienced significant volatility in 2021. According to data from Cointelegraph Markets Pro, the BTC price has risen by 16% in the last week to reach $47,627 at the time of publication.

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Square to acquire Australian fintech Afterpay in $29B deal

August 2, 2021 Coin Telegraph

Square to acquire Australian fintech Afterpay in B deal

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Square will acquire Australian fintech firm Afterpay in a $29 billion stock deal, expecting to close the transaction in Q1 2022.

Jack Dorsey’s cryptocurrency-friendly digital payments firm Square is expanding competition with global payment giants like PayPal by acquiring a major Australian lending company.

Square announced Sunday that the firm has entered into a scheme implementation deed to acquire all of the issued shares in fintech company Afterpay in a $29 billion deal. The transaction is based on the closing price of the Square common share and is expected to be paid in all stock in the first quarter of 2022.

The acquisition enables Square to further accelerate its strategic plans for payment ecosystems as the company is looking to integrate Afterpay into its Seller and Cash App business units to enable a “buy now, pay later” (BNPL) service.

Also referred to as installment loans, BNPL transactions allow customers to pay a bill in small portions throughout a fixed period of time and are actively pioneered by global financial firms like PayPal, Mastercard, Klarna, Citi, and others.

According to the announcement, the integration will enable small businesses to offer BNPL at checkout, allowing Afterpay consumers to manage their installment payments directly in Cash App and discover BNPL offers directly within the app. The integration marks a new milestone for Square in meeting the growing consumer demand for shifting away from traditional credit.

Square co-founder and CEO Dorsey said that the acquisition will help the companies to deliver on their shared mission to make the financial system more accessible, fair and inclusive. “Together, we can better connect our Cash App and Seller ecosystems to deliver even more compelling products and services for merchants and consumers, putting the power back in their hands,” he noted.

As part of the transaction, Afterpay’s co-founders and senior executives will join Square and help lead Afterpay’s related merchant and consumer businesses within Square’s Seller and Cash App ecosystems. Square has also agreed to establish a secondary listing on the Australian Securities Exchange (ASX) to allow Afterpay shareholders to trade Square shares via CHESS depositary interests on the ASX.

The news comes amid Square announcing notable second-quarter earnings, reporting 200% growth in Bitcoin (BTC) revenue. Square’s Bitcoin services generated $55 million in gross profit, increasing 223% year-on-year, while Cash App generated a gross profit of $546 million, surging 94%.

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