Ledn Raises $ 70 Million to Develop Bitcoin-Backed Mortgage Product

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Toronto-based cryptocurrency lending platform Ledn has raised $ 70 million in a Series B funding round to support the growth of its digital asset lending business, including a new mortgage product backed by Bitcoin.

The round valued the company at $ 540 million and was led by 10T Holdings, the company said on Wednesday. Other investors included Golden Tree Asset Management, Raptor Group and FJ Labs. Eleven other existing venture capitalists, such as White Star Capital and Kingsway Capital, followed in the round.

Founded in 2018, Ledn focuses on savings and loan products for Bitcoin and other digital assets. He claims the startup has more than $ 1.7 billion in assets from clients in 127 countries. Dollar loan origination has increased by more than 25% since the third quarter of 2020 and 44% of lending clients are in Latin America.

The Bitcoin-backed mortgage product accepts Bitcoins and properties as collateral for loans to clients who wish to purchase new real estate or finance a property they already own. Loan amounts are equal to 50% of the combined value of Bitcoins and goods.

The product is currently offered with a two-year term, with the possibility of renewal. It requires regular monthly interest payments. The rates will depend on market conditions, but the inclusion of the warranty can reduce costs, the company explains on the website.

According to Ledn, if Bitcoin prices fall, the customer must post more collateral or repay part of the principal. Otherwise, the company will sell part of the currency to achieve the required loan-to-value ratio of 50%. Customers, however, will gain when Bitcoin’s value rises.

Already in pilot mode in Canada, the product should be widely offered in the country and in the United States at the beginning of 2022. The company aims for 100 million dollars of origination by the end of the first quarter of 2022.

Adam Reeds, CEO of Ledn, said in a statement that most people with considerable Bitcoin wealth cannot use their assets to qualify for a mortgage with a bank, and the product is aimed at those who choose. to invest outside the mainstream of inheritance. banks.

“Our clients want to diversify their portfolio in order to protect their wealth, then use it for cases such as buying a house, but one should not be at the expense of the other,” he said. he said in a press release.

The cryptocurrency market was worth more than $ 2.2 trillion on Wednesday, according to CoinGecko. Some banks, lenders and fintech are testing the technology, but lack of regulatory clarity and fears of volatility have prevented these currencies from fully integrating into products and services.

When it comes to the mortgage industry, investor acceptance of cryptocurrencies lags behind the development of new products. Among government agencies, there remains significant resistance to the acceptance of cryptocurrencies.

In early December, Freddie Mac said that due to the high level of uncertainty, the income of cryptocurrency borrowers may not be used to qualify for the mortgage. Additionally, borrowers can exchange cryptocurrency for US dollars for mortgage transactions. The agency said it will continue to monitor cryptocurrency developments to update requirements going forward.

In September, Pontiac-based wholesale mortgage lender United Wholesale Mortgage accepted its very first cryptocurrency mortgage payment – and five more in October. The transactions, however, were used as models to “better assess the evolution of cryptocurrency payments for consumers,” the company said.

Due to “additional costs and regulatory uncertainty in the crypto space”, the lender has decided to keep this initiative in pilot phase for now, “said Mat Ishbia, President and CEO of UWM.

Figure Technologies, the lender founded by former SoFi chief Mike Cagney, is building a platform based on blockchain technology, which in the future could facilitate cryptocurrencies used to buy homes, but in years .

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