Atomic Capital Goes On The Attack With New Crypto Loan Offer In The Market
Atomic Capital Makes A Very Aggressive Loan Offer In The Crypto Market
The asset tokenization company, Atomic Capital, is making a very aggressive loan offer in the crypto lending field. Back on Wednesday, the firm will be giving USD loans for 85% of the value of the Bitcoin (BTC) or Ethereum (ETH) used as collateral. In this way, the firm will be offering the most generous loan-to-value (LTV) in the space.
Atomic Capital Offers Great Loan Opportunities
This is not the first company that is offering loans using cryptocurrencies as collateral. However, this is the first firm that is offering crypto-backed loans with an LTV of 85%. Just to put it into comparison, BlockFi offers a maximum LTV of 50%. Celsius Network, meanwhile, is giving customers 25%, 33% or 50% LTV.
Lenders will have less protection if the cryptocurrency market falls with a higher LTV ratio. However, the additional risk will be expensive for users. Atomic will be charging interest rates of 11% and 13%. This is much more than the 4.5% or 8.95% that other competitors offer.
The firm explained that it will be ranging the loans from $100,000 up to $100 million. The service will start as soon as on April 9. According to the CEO of the company Alexander Blum, the firm has already received requests for $80 million worth of loans.
The firm was able to gather $3.4 million after conducting a Security Token Offering (STO) back in October 2018. Moreover, they have received $250,000 from Baroda Capital as a seed investment. Nonetheless, the funds will not be used to make loans.
The loans will not be funded by the firm itself, instead, it will be brokering them for Lockwood Group. This company based in Luxembourg will assume the risk and take custody of the borrowers’ crypto collateral.
It is worth mentioning that there is no information on whether Lockwood will keep clients’ cryptocurrencies in cold storage wallets or if they will use hot wallets. At the same time, Lockwood did not specify if they will be trading or lending the funds to other clients while in custody.
Blum commented about what would happen if the virtual currencies are lost:
“THe loss of the cryptocurrency while in the custody of Lockwood either by poor trading or some type of cybersecurity failure would not absolve the legal obligations Lockwood has to a borrower in returning the collateral as scheduled. Atomic is comfortable with this because of both Lockwood’s highly experienced, global team of financial professionals and significant capital reserves.”