BlockFi, a New York-based cryoptocurrency lending platform, announced that it has raised $52.5 million from a funding round. The round was led by Galaxy Digital, a merchant bank that is focused on cryptocurrencies. The bank is led by Michael Novogratz, the Galaxy Digital CEO and founder.
Using digital assets to secure loan facilities
In a statement, BlockFi said that the financial injection includes an equity investment and a loan purchasing facility. The startup added that this is the first institutional funding for loans backed by digital assets.
While commenting on the matter, BlockFi co-founder and CEO, Zac Prince, said that there has been a growing demand for crypto-to-fiat lending.
In a tweet, Novogratz confirmed the new funding round and added that there has been big growth in the crypto lending space, which he says is very important to the growth of a strong financial system.
Novogratz said that the decision to partner with BlockFi was motivated by the latter’s deep lending expertise and institutional approach. The startup intends to use the money from the funding round to expand its operations outside the United States. The firm will also bring more digital currencies on board. Due to Galaxy Digital’s large financial contribution, its head of principal investment, Chris Ferraro has been appointed a member of board of BlockFi.
The growth of institutional funding
Speaking recently on institutional funding and the entire blockchain sector at the Korea Blockchain Week, Novogratz said that there has been an increase in the number of institutional investors eying digital currencies. He noted that currently many institutional investors are targeting crypto venture capital funds, which they have invested. This trend, according to him, will lead into actual trading of virtual coins.
BlockFi offers retail and corporate loans to clients using crypto assets security for the loan currently the startup offers loans on holdings in Bitcoin and Ethereum.
BlockFi was launched in January by Zac Prince. The startup has successfully run two rounds this year. In February, BlockFi secured $1.55 million from Kenetic Capital, SoFi in a funding round.