Genesis Global Trading, one of the largest over-the-counter cryptocurrency dealers, said it has loaned digital assets valued at more than half a billion dollars to institutional borrowers including hedge funds and other financial firms.
The New York-based firm began lending digital currencies in March and has $130 million in active loans denominated in Bitcoin, Ether, XRP, Bitcoin Cash and other coins, it said Thursday in a statement. Borrowers have used the assets to short digital currencies, hedge investments of fund business operations, Genesis said.
The majority of what the firm lends is borrowed from other holders as the demand for the service initially outstripped supply, Genesis Chief Executive Officer Michael Moro said in an interview. The firm said it has loaned $553 million since March.
Some of the largest loans were made in Ether to hedge funds, which are typically using the capital to short, or bet the price will drop, Genesis said. After Ether fell about 80 percent from its highs in March, that activity waned, according to the report.
As of September, Ether loans accounted for just 4 percent of the total, while the majority was in Bitcoin. Moro said most of the loans are used to hedge positions in derivatives markets that started in December.
Genesis pays between 5 percent and 7 percent to borrow cryptocurrencies and then charges about 10 percent or 11 percent to lend, Moro said. He said the firm plans to release quarterly lending reports.