Family office Dominion Capital has announced that it is entering the cryptocurrency loans business. This will allow holders of virtual currencies to obtain loans against their digital assets instead of converting these virtual assets into cash. According to the chief executive officer of Dominion Capital, Mikhail Gurevich, this is likely to attract some of the biggest initial coin offerings who have digital assets worth millions but which they are finding it hard to liquidate.
Initially Dominion Capital will provide loans against Bitcoin (BTC) but other virtual currencies will be accepted in the future. During the lifetime of the loan, the cryptocurrency lending subsidiary of Dominion Capital will hold the digital asset as collateral.
Offering loans against cryptocurrencies has existed for quite some time though it hasn?t exactly been a soaring success. One of the earliest crypto lenders include BTCJam which was started in 2013 but which stopped accepting new customers from the United States two years ago over regulatory concerns. By July 1 this year the firm intends to completely wind down. Another crypto lender was BitLendingClub which was started in 2014 but which two years later announced it would be closing shop.
The similarity between these early crypto lenders was the fact that they were targeting the consumer market. This segment dried up in the years that followed as Bitcoin?s price fell dramatically. During this time there were more people selling the digital currency than there were holding the asset.
Some of the crypto lenders have however managed to survive somewhat. This includes Bitbond, which is based in Germany. Early last year Bitbond managed to raise approximately $1.2 million. Others which have sprung up to provide fiat loans where digital assets are used as collateral include ETHLend and SALT. What sets Dominion Capital apart from these is capital, user experience as well as the strategic partners it has.
About $1 million has so far been spent by Dominion Capital in developing a viable product. In a few weeks the family office intends to launch a Series A and it aims to raise approximately $5 million. Initially only modest amounts will be offered as loans.
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