CoinFLEX Sets Up Short-Term Lending Facility for Crypto Traders

Cryptocurrency futures exchange CoinFLEX is setting up a blockchain-based market for unsecured lending as the digital currency boom continues.

Firms can borrow U.S. dollars and Bitcoin for short-term trading purposes, with the note tokens expected to offer a yield of 8% to 10%, according to a CoinFLEX statement and Chief Executive Officer Mark Lamb. Lenders will also be compensated with 30% of the borrower’s trading fees for the first 12 months, the statement showed.

The product is the latest seeking to tap expanding demand for crypto borrowing and lending, a trend thought to be contributing to the sharp rally in Bitcoin and other digital assets this year. One example of the trend is so-called yield farming, which involves lending a digital coin in return for interest and sometimes fees, but also handouts of units of a new cryptocurrency.

The note tokens carry a 30-day term and will be denominated in U.S. dollars, according to CoinFLEX. Borrowers have a mandated trading volume requirement, it said.

Street Interest

Digital assets continue to draw converts and skeptics alike. On the latter, Gary Cohn, the former economic adviser to President Donald Trump, recently said Bitcoin “lacks some of the basic integrity of a real market.”

CoinFLEX is the trading name of Liquidity Technologies Ltd., a company incorporated in the Seychelles, according to the CoinFLEX website. Citizens and residents of the U.S. can’t purchase the note tokens as they are prohibited from signing up to CoinFLEX.com.

©2020 Bloomberg L.P.

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