The possibility that companies launching new financial products involving BTC has brought it on the radar of traditional institutions. Nexo, a lending institution, has announced its partnership with the Fidelity Digital Assets custodian. Together, they will be providing Bitcoin-backed loans to investors.
Bitcoin-backed Loans for Institutional Investors
Through this collaboration, Nexo is aiming to create an environment in which an increasing number of institutions can access its platform. Digital assets could become a key component of new investment products.
Fidelity Digital Assets represents the world of institutional investments through the use of cryptocurrencies. Using Bitcoin-backed agreements, Nexo will secure the loans with the above-mentioned firm.
This would be possible through Tripartite loans, which will serve as a financial safety net for institutions so as to ensure exchanges. Each loan can be backed by an asset repurchase agreement, a popular practice in traditional institutional lending.
As new products exploiting the characteristics of the crypto world are explored, more financial opportunities will arise.
BTC would play a critical role in future loan operations, however its performance will be limited. At this point, it would serve as an external backup asset, while institutions consolidate their traditional asset borrowings.
Considering Nexo’s actions to develop these loans, banks would also be interested in Nexo’s efforts. Even though the banks have not confirmed their positions, it is rumored that the banking sector would be interested in entering this kind of financing.
Fidelity Digital Asset Products backed by Bitcoin(BTC)
The announcement of the Nexo-Fidelity collaboration is just one of several attempts by the institutional custodian to integrate BTC-related operations. For some time now, Fidelity has been trying to create products in this category for institutions.
The same was true of Fidelity’s collaborations with BlockFi and Silvergate, which took Bitcoin into account to guarantee compliance with agreements. Nexo views the new loans as “safe” because of the custodian’s involvement.
With the availability of collateral from external assets, like bitcoin, Nexo will now be able to freely present its products to institutional investors.
The announcement of the Nexo-Fidelity collaboration is just one of several attempts by the institutional custodian to integrate BTC-related operations. For some time now, Fidelity has been trying to create products in this category for institutions.
The same was true of Fidelity’s collaborations with BlockFi and Silvergate, which took Bitcoin into account to guarantee compliance with agreements. Nexo views the new loans as “safe” because of the custodian’s involvement.
With the availability of collateral from external assets, like bitcoin, Nexo will now be able to freely present its products to institutional investors.
Kalin Metodiev, managing partner and co-founder of Fidelity commented on this. “Our customer base will now have full use of our industry leading credit and commerce products with dependence on custom custody and security solutions from Fidelity Digital Assets,” he said.
Originally published here
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