Meet The Entrepreneurs Behind The World’s First Crypto Asset Lending Platform

Steve Swain and Linda Wang

Given the current levels of interest in cryptocurrency, some financial pundits are envisaging a migration of financial services from the institutional world to the world of crypto assets, such as Bitcoin and ethereum.

One startup that believes it is perfectly positioned to capitalise on this trend is London-based Lendingblock, which enables holders of crypto assets to lend them out and accrue interest on their holdings, while giving borrowers access to the assets they need without having to buy them outright.

The business was founded last year by Wall Street veteran and entrepreneur Steve Swain and Linda Wang, a Cambridge and UCL graduate who studied computer science before joining deep tech accelerator Entrepreneur First, where she founded her first company, Lendr.

The pair first met when Swain became an advisor to Lendr, which provided a reverse auction platform for mortgages, connecting borrowers and lenders in a similar way to Lendingblock, eliminating the need for intermediaries. At the time Swain was a partner at Deloitte specialising in fintech and regulatory technology, whilst Wang had been working in blockchain product development since 2014.

“Our joint experience and exposure to cryptocurrency allowed us to identify the opportunity and need for a trusted lending marketplace,” says Wang. “It was clear to us that just like in the traditional capital markets, as a market that generated $4 billion of revenue in 2017, the crypto economy required a parallel financial service for securities lending.”

The founders worked on the premise that the market of cryptocurrencies and digital assets would follow a similar evolution in the credit markets, but with a faster rate of adoption due to the rapid speed of market development.

Swain says: “Last year saw rapid growth in the scale of the cryptocurrency, driven by the rise in price of established coins and new coins entering the marketplace through Initial Coin Offerings (ICOs), which generated $2 billion in initial investment. As the first exchange for crypto asset-backed loans we think that we meet the needs of institutional and individual borrowers and lenders in the crypto economy.”

While the blockchain rise to mainstream prominence appears to be a recent phenomenon, distributed ledgers themselves are actually a mature, well peer reviewed technology.

Wang says: “The recent hype is actually due to huge gains people made in their crypto portfolio value in 2017, encouraging retail investors with little understanding of the crypto markets to participate. Many still don’t understanding the underlying technologies but want to access the growth in value.

“Lendingblock is creating something that is badly needed but doesn’t currently exist, an infrastructure that facilitates borrowing and lending across different cryptocurrencies.”

Essentially Lendingblock is an open exchange for borrowing and lending crypto assets. The aim is to enable the holders of digital assets to generate stable and secure returns without sacrificing the benefits of ownership, and for borrowers who hold digital assets to be able to use them as collateral to borrow at market rates to support funding, hedging or investing strategies.

“Lenders will include institutional lenders, such as asset managers, hedge funds, and family offices, as well as individual participants in crowdfunding who can gain access to lending opportunities not currently available to them,” says Swain. “Borrowers will be typical users of existing securities lending, including hedge funds, investment managers, market makers, and proprietary traders.”

He points out that one important aspect of the model is the fact that the lending agreements are fully collateralized, serving to underpin confidence in the platform and extending it to a broader range of participants.

Based in London, the fintech startup capital, the company has an ideal vantage point for monitoring new and emerging sector trends. What remains the subject of speculation is the potential impact that Brexit will have on the city’s fintech sector, and on new entrants like Lendingblock, as the laboured negotiations prolong the market uncertainty.

Swain insists that for now the impact is minimal and that London is still the leading fintech place to be, a hotspot of expertise that continues to attract significant amounts of investment. “Confidence remains high and we are seeing lots of exciting businesses developing here,” he says.

Lendingblock’s own revenues are generated from borrowing and lending fees and, based on industry estimates, the founders believe that the crypto lending market could generate annual revenues in excess of $300 million within three years.

From its launch six months ago, Lendingblock now has ten core employees working alongside numerous vendors, service providers and partners. Initially bootstrapped, the business has just completed a successful private token sale with institutional investors that raised $500,000. A pre-sale will take place in early March, followed by an ICO (Initial Coin Offering) later that month.

Wang adds: “Because there is such a need for our product in the market, we have seen a high amount of investor interest already, in particularly from a core user base of institutions who wish to participate.”

Source: https://www.forbes.com/sites/alisoncoleman/2018/02/15/meet-the-entrepreneurs-behind-the-worlds-first-crypto-asset-lending-platform/3/#70bcb65f3bd9

Author: Alison Coleman | Forbes Contributor