Yueqi Yang
Genesis Global Trading Inc., one of the largest cryptocurrency brokerages for institutional investors, said it loaned a record $50 billion of assets in the fourth quarter to borrowers including crypto funds and other financial firms.
Genesis, a subsidiary of Digital Currency Group, said loan originations for 2021 totaled $131 billion, nearly seven times higher than 2020. Borrowers such as crypto funds use the assets to short digital currencies, hedge investments, or invest in yield-generating platforms. At the year end, its lending desk saw a wave of deleveraging as prices on most cryptocurrencies fell, the New York-based company said in its fourth-quarter report.
Crypto derivatives trading activity also reached a quarterly record with over $20.7 billion in notional value traded globally.
“We’re seeing many institutions not interested in spot Bitcoin because that’s not going to give them the best return,” Noelle Acheson, head of market insights at Genesis, said in an interview. “Many are going straight to our derivatives desk because of the yield strategies that they can help provide.”
Genesis’ spot desk reported over $30.8 billion in volume, up over 23% from the third quarter. Volumes were high at the beginning of fourth quarter, largely triggered by interests in the Bitcoin-futures ETF launched in mid-October, said Acheson. “Towards the end of the year, we did start to see some weakening of volumes” in some segments of the market.
Genesis expanded into NFT lending in the fourth quarter, underwriting loans backed by non-fungible tokens. The NFT market is “young still” and lending volumes are driven by high-net-worth individuals, Acheson said.
Despite the recent crypto downturn, institutional investors still show interest in the cryptocurrency space, with growing inquiries from those in Latin America and Europe, Acheson said.
