Genesis Capital's lending program quickly recovered in the second quarter after a steep drop resulting from the mid-March bitcoin sell-off. The crypto company's active loan supply has increased 118% since the end of the first quarter, reaching $ 1,4 billion mid-year, the company announced this week.
The dizzying pace of growth is likely an anomaly, the company said. "The 100% growth rate in our loans is a function of the fact that we updated our dataset around March 31," Genesis CEO Michael Moro said in an interview.
The business took a hit when bitcoin, along with major financial markets, collapsed as a result of the coronavirus pandemic at the end of the first quarter. However, the data indicates that crypto loans remain a popular tool for arbitrage among professionals. Genesis Capital is the lending arm of Genesis Trading, itself a subsidiary of Digital Currency Group (DCG).
Unsecured loans
Market talk has recently focused on the lending practices of the leading niche companies. Genesis claims that the interest obtained by the borrowers fully finance the interest with which it pays its lenders.
Moro did not specify whether to re-mortgage the guarantees. Genesis vice president of lending, Matt Ballensweig, said the company makes unsecured loans to "strategic partners," but did not detail the percentage of that volume of unsecured loans.
Clients who lend their assets through Genesis are high-net-worth individuals, hedge funds, and other wealth managers and generate 6% to 12% returns on such loans. The companies that borrow from Genesis are hedge funds, quantitative trading companies, cryptocurrencies, other cryptocurrency lenders, and cryptocurrency management companies.
Trading is stable
Most of Genesis' loans are directly impacted by the spread between bitcoin spot and futures prices, Moro said. Despite reduced volatility in the spot market, Genesis' trading volume increased by $ 1,25 billion, hitting $ 5,25 billion in the second quarter.
With its new derivatives trading desk introduced in May, the company traded $ 400 million in forwards and options with nearly 50 counterparties active in 10 different businesses. About 67% of the trading volume was executed bilaterally, while the remaining 33% was executed on the stock exchange.
About 80% of the volume was concentrated in USD BTC trading, while USD ETH trading and other major tokens make up the rest.
The firm also hopes to introduce capital for family offices seeking crypto-hedge funds that have the strategies, fee structure and asset exposure to meet their investment needs in Q2020 XNUMX as part of its offering. to become a primer broker.
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