The crypto lending market is on a fast growth track as institutions and miners seek financing alternatives based on digital assets. A Chinese crypto lender, Babel Finance, has noted that its loan book grew from an outstanding $52 million at the beginning of 2019 to close at $289 million.
Babel’s Co-founder, Flex Yang, highlighted that the growth in business is a reflection of the surge in demand for crypto lending services. The Hong Kong-based startup has since attracted significant funding and support following its recently closed Pre-A funding.
Yang did not comment on how much was raised but gave an estimated valuation of around $50 to $100 million. Some notable investors who contributed in this funding round include Parallel Ventures and Dragonfly Capital.
The Major Clients in Crypto Lending
As one would expect, most industries or business operations have a dominant target market that keeps them running during hard times. For crypto lending, miners seem to have taken the center stage over the course of 2019; this however declined towards the end.
According to the statistics, over 60% of the $52 million loaned out by Babel during Q1 of 2019 was directed to crypto miners. This was when the BTC price hit lows of $4,000, therefore, pushing miners to put their mined coined as collateral over selling them in a bear market. Babel, in turn, facilitated the miners with digital assets (USDT) to cover their utility costs or update mining resources.
This portfolio weighting in favor of miners has however changed as more hedge funds and institutional investors join the space. Towards the end of 2019, institutions accounted for close to 50% of Babel’s loan books while miners had dropped significantly to 17%.
What next for Babel’s Crypto Lending Model?
The Beijing headquartered startup plans to expand its market share from the Pre-A funding proceeds. Yang explained this briefly noting that they were okay on other fronts;
“The purpose of the fund raise is to help us expand the network of our overseas partners since our cashflow and reserve ratio are healthy at the moment.”
Babel plans to raise more funds in an upcoming financing round within the first half of 2020. In addition, the firm launched a private banking service to target high net worth individuals looking to leverage the opportunity in crypto lending. So far, Babel has convinced over 10 Chinese clients willing to invest up to $50 million in USDT.
All this hard work seems to be paying off for Babel, allowing them to hit a new all-time high in outstanding loans on Feb 18th, 2020, reaching $380 million.
As of December 31st, 2019, our cryptocurrency lending business has been enjoying fast growth, with the overall outstanding loan balance of $289 Million, increased 3780% YOY.
Click the link for the Babel Finance 2019 Annual Report. #Bitcoin https://t.co/unnhq5LGvk
— BabelFinance (@BabelFinance) March 5, 2020