The New York-based OTC-based cryptocurrency dealer Genesis Global Trading reported that in just half a year of work, it issued to its institutional clients loans in cryptocurrencies totaling more than half a billion US dollars. This writes Bloomberg .
Genesis Global Trading is a SEC and FINRA registered broker and is part of the business empire of Barry Silbert and his Digital Currency Group (DCG).
The company began issuing cryptocurrency loans in March of this year and today has active loans denominated in Bitcoin, Ethereum, XRP, Bitcoin Cash and other currencies in the amount of $ 130 million. The total amount of loans issued was $ 553 million.
Borrowers, which include hedge funds and other financial institutions, use these funds to play to lower the price of digital currencies, as well as to hedge investment positions.
At the same time, as noted by Genesis Global CEO Michael Moreau, most of the funds issued as loans were originally borrowed from other cryptocurrency holders, since the demand for the service exceeded the company's capabilities.
According to him, the largest loans were issued to Ethereum to hedge funds, which usually use such capital for bets on lowering the price of an asset. However, since the rate of Ethereum has dropped by 80% since March of this year, interest in the service has weakened. As of September, Ethereum accounted for only 4% of loans, while most of them were Bitcoin.
Michael Moreau also says that much of the funds are used to hedge positions in the derivative markets that opened last December. According to him, Genesis Global pays 5 – 7% for receiving a loan, while it charges 10 – 11% from its customers. In the future, the company promises to publish quarterly reports on the flow of its assets.
In May of this year, Genesis Global Trading received BitLicense – a special license to operate in the state of New York.
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