Onchain Collateral Could Unlock Better Loan Terms, Says Crypto Bank Executive
TradFi institutions begin exploring crypto-backed lending as sector grows
Fabian Dori, chief investment officer at digital asset bank Sygnum, says lenders offering crypto-backed loans prefer direct onchain assets over exchange-traded funds (ETFs), as the structure benefits both borrowers and banks.
According to Dori, onchain assets provide greater liquidity, enabling lenders to execute margin calls around the clock and offer borrowers higher loan-to-value (LTV) ratios. “It’s preferable to have direct tokens as collateral, because then you can do it 24/7. If you need to execute a margin call on an ETF on Friday at midnight, when the market is closed, it’s more difficult,” he explained.
LTV ratios in crypto determine how much a borrower can access relative to their posted collateral. A higher ratio allows greater credit flexibility, while a lower ratio restricts loan size for the same amount of collateral.
While crypto-backed lending is still in its early stages, Dori expects the market to expand as digital assets gain broader adoption.
Crypto lending debuts on Wall Street as TradFi warms up to crypto-backed lending
Figure Technology, a crypto lending platform, debuted on Nasdaq on Thursday, with shares jumping more than 24% in intraday trading. The company now holds a market capitalization above $6.8 billion, according to Yahoo Finance.
Traditional giants are also testing the waters. JP Morgan is reportedly considering introducing crypto-backed loans for clients, with a potential launch projected for 2026 if the initiative moves forward.
