Crypto Lending Platforms Prepare to Assail the Banking System

Every couple of months, a new trend comes along that captures column inches and crypto Twitter chatter, before everyone moves on to the next new thing. Last month it was defi, before that IEOs, and before that exchange tokens. Right now, the hot topic is crypto lending, and it comes bearing an intriguing question: are crypto lending platforms a solution to a common problem, or a solution in search of a problem to wrap itself around?



Before we attempt to answer that, some basic facts: getting a bank loan for personal or business use is extremely hard, verging on the impossible these days. Unless you have property you can collateralize against, you’ll struggle to get a loan, and even if you do, the interest will likely be exorbitant. Gone are the days when you could walk into your bank, have a sit down with the manager and thrash out the terms of a loan with which to start your own business. Attempt that today, casually dropping into the conversation that you were planning your own crypto startup, and not only would you be refused credit, but you’d be liable to have your account closed.

Such is the suspicion with which the legacy financial system views crypto. They’ll be proven wrong eventually, around the same time as the last of their venerable banking houses are being converted into nightclubs and apartments.



From Bricks and Mortar to Binary Code

Bartlomiej Wasilewski is the founder of Marshal Lion Group, a tokenized lending market that provides non-bank loans for businesses and individuals. He told “The digitization of finance is inevitable, not just within the crypto sector, but also more broadly, as shown by the rise of microloan platforms that enable individuals to lend capital to businesses, while retaining oversight over how it is deployed, and the ability to witness the benefits of their investment in action and be remunerated for their services.” He added:

Within the crypto space, lending is about more than simply attempting to mirror the products to be found in the traditional financial system. A lot of crypto businesses struggle to obtain banking facilities, and for these entities, having access to alternative sources of capital, be it as a bridging loan or to support long-term growth, is vital.

Wasilewski’s vision is slowly materializing, but the wounded banking system is not yet in its death throes. It will likely take a decade or more before digital currencies render it obsolete. In the meantime, those who have been refused credit by financial institutions are being urged to turn to crypto lending. But are crypto lending protocols and platforms enterprise-ready? And if so, what do they have to offer entities that have been turned away by the banking system?

Anything the Banks Can Do, Bitcoin Can Do Better

Crypto lending has been a slow-burning trend this year, before exploding into life this week in a flurry of announcements. In July, for example, partnered with lending platform Cred to offer up to 10% interest on BCH and BTC holdings. The lending platform enables borrowers to obtain $25,000 or more in fiat currency, in exchange for collateralized crypto assets. Then, on Monday August 26, published an article on the changing crypto exchange landscape, which ventured that more exchanges are likely to introduce lending services in the near future. That future proved to be closer than imagined, for the very same day, Binance revealed its new lending platform.

The focus of its release was on the benefits to lenders, who will earn annualized interest of up to 15% on their BNB, USDT, and ETC. On Wednesday, the first round subscription was filled in less than 20 seconds by lenders eager to lock up their crypto assets. This feat says something about the level of interest in crypto lending, but it probably says more about the strength of the Binance brand. It may also say something about the diminishing ways for people to earn interest on their fiat holdings: thanks to negative yields, you are now likely to be penalized for purchasing 30-year government bonds.


This article by Kai Sedgwick was originally published at news,