BlockFi, a cryptocurrency lender platform, recently announced that it will stop accepting Grayscale Bitcoin Trust (GBTC) as collateral. According to The Straits Times, citing Bloomberg, it stopped accepting shares of the fund as collateral.
In response to Bloomberg’s report, the New Jersey-based lender said it is winding down ‘a couple’ of loans with GBTC as collateral. “We are not saying that we won’t support GBTC as collateral moving forward. Like any collateral, we constantly evaluate appropriate collateral haircut ratios and aim to accept as many types of collateral that our clients hold as possible,” BlockFi commented. However, Grayscale Investments declined to issue any statement about the matter.
BlockFi and FTX
Last month, BlockFi signed a $250 million revolving credit agreement with FTX. According to Zac Prince, BlockFi’s Chief Executive Officer, the credit facility provides them with access to capital that ‘further bolsters our balance sheet and platform strength’ in the midst of the crisis it has been facing.
With the agreement, BlockFi can access capital during a rout in the digital currency market. The company announced last week that it would reduce its headcount by about 20% and reduce its marketing spend and executive compensation.
“The proceeds of the credit facility are intended to be contractually subordinate to all client balances across all account types (BIA, BPY & loan collateral) and will be used as needed. Throughout the market volatility of the last several weeks, I’m incredibly proud of how our team, platform and risk management protocols have performed. Today’s landmark announcement reinforces BlockFi’s commitment to serving its clients and ensuring their funds are safeguarded,” Prince pointed out at that time.
He added: “This agreement also unlocks future collaboration and innovation between BlockFi & FTX as we work to accelerate prosperity worldwide through crypto financial services. This is a significant step forward in our commitment to the strength and accessibility of crypto markets.”
This article was written by Felipe Erazo at www.financemagnates.com.