Genesis Global Capital – Institutional Digital Currency Lending
Today, we’re excited to announce the launch of Genesis Global Capital (“Genesis Capital”), an institutional digital currency lending business. Genesis Capital allows institutional investors the opportunity to borrow bitcoin, ether and other digital currencies in large quantities over fixed-terms.
Having been incubated by our affiliated company, Genesis Trading, we feel we’re in a great position to truly understand the pulse of the market and identify evolving industry needs quicker than most. We believe now is a great time to offer an institutional-focused lending service because it will increase general liquidity in the marketplace, encourage new financial institutions to participate in a two-sided market and increase the working capital that companies use to scale their digital currency-centric businesses.
Through ongoing relationships and conversations with market-makers, hedge funds and trading firms we’ve identified a common need to borrow digital currencies
In Order To:
• Short Spot
• Deploy Towards Market-Making Strategies
• Use as Additional Working Capital
With the Goal of:
• Hedging Risk, Enhancing Returns
• Leveraging Arbitrage Opportunities, Limiting Risk
• Scaling Business Operations
In the current market structure, we see quite a few use-cases for borrowing digital currencies and as the digital currency ecosystem continues to mature, we expect such use-cases to increase. Historically, it has been very difficult for institutional investors to get borrow on meaningful amounts of digital currency to short. With the launch of Genesis Capital, active hedge funds and other institutional investors can take advantage of this as a way to either hedge total portfolio risk or take speculative short positions. We think that shorting the spot market will become even more useful to active managers once gaining broad exposure through ETFs becomes commonplace. Managers looking to take long positions on the market holistically, but are particularly bearish on a specific asset, can short to hedge out the individual risk of that constituent.
In addition to hedge funds, market-makers (both spot and derivative) find value in borrowing digital currencies. Firms trading bitcoin futures or options find it advantageous to have bitcoin on borrow because they can short-sell those borrowed bitcoin to delta-hedge their long derivative positions. Spot trading firms can utilize borrow as a way to leverage their existing trading strategies without taking on additional risk. In order to maintain a long-term neutral position while simultaneously taking advantage of various arbitrage opportunities, traders should consider the benefits of borrowing digital currency.
There are other uses cases for borrowing aside from portfolio management. As businesses increasingly build products and services around bitcoin, they may need to finance their daily operation by borrowing bitcoin or other currencies. An example of this today would be remittance companies that need to make immediate settlements to their customers, but don’t want to buy a large balance of bitcoin and hold that risk on their books. We expect many different types of these use cases to emerge in addition to the obvious ones that exist today and plan to evolve our offerings along with the market.
How Does It Work?
So how does it work? Genesis Capital can now offer borrow on bitcoin, ether, ether classic, litecoin, ripple, bitcoin cash, zcash and other digital currencies in sizes from $100,000 upwards over fixed terms. By fixed terms, we mean you can have the loan from two weeks to six months depending on your business need. We believe that giving institutions the ability to both borrow and trade will expand their portfolio management and trading weaponry and encourage additional funds to enter the space.
As a first mover in this area, we think that a high-touch model is the right approach in the near-term. Think traditional stock loan desk. Onboard, post collateral, borrow, and then put that capital to work as you choose to. Create the term and structure that makes sense for your trading needs and face a regulated and reputable counterparty.
To begin the onboarding process with us today, please fill out this form and we will reach out to further discuss your needs.
The Genesis Capital Team