- Client: US Resident/National
- Net Worth: Over $20 million
- Financing Requirement: $6.5 million
- Terms Offered: 65% LTV
In this case, Enness assisted an ultra-high-net-worth individual in sourcing a non-recourse single-stock loan against their Bitcoin holdings to generate liquidity for further investment opportunities.
The client was an entrepreneur who had built their wealth through early investments in Bitcoin and stocks listed on NASDAQ. Their wealth was predominantly held across real estate and Bitcoin, creating a scenario where a significant proportion of their wealth was concentrated in assets that they did not necessarily want to sell to generate liquidity.
Cryptocurrency-backed lending can allow eligible borrowers to raise finance against certain digital assets, with Bitcoin being one form of collateral considered by specialist lenders. Depending on the lender and structure of the facility, proceeds may be used for purposes including further investment, diversification or property purchases.
In this case, the non-recourse structure meant that the cryptocurrency provided the security for the facility without requiring a personal guarantee or additional security over the client’s other assets, subject to the terms of the facility. This provided the client with a route to access liquidity without selling the underlying Bitcoin holdings.
Cryptocurrency-backed lending can be particularly complex because digital assets can experience significant price volatility. Lenders therefore assess factors including the underlying cryptocurrency, loan-to-value ratio and proposed structure. Some specialist lenders may also offer additional mechanisms, such as call or put options, depending on the asset and transaction structure.
For this transaction, Enness sourced a specialist solution providing the client with $6.5 million of financing at 65% LTV. The facility allowed the client to access liquidity against their Bitcoin holdings without selling the underlying asset, providing capital that could be deployed towards further investment opportunities.
This case demonstrates how crypto-backed lending can provide an alternative source of liquidity for sophisticated investors whose wealth is concentrated in digital assets. However, the suitability and availability of this type of finance depend on the borrower’s circumstances, the digital assets being used as collateral and the lender’s criteria.
ENNESS DOES NOT PROVIDE ADVICE ON INVESTMENTS OR CRYPTOCURRENCIES. LENDER INTRODUCTIONS IN THIS AREA ARE UNREGULATED. TERMS AND AVAILABILITY ARE SUBJECT TO INDIVIDUAL CIRCUMSTANCES, UNDERLYING DIGITAL ASSETS AND LENDER CRITERIA.
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Property values can fall as well as rise, and you may not get back the amount originally invested. Property investments can be illiquid and may take time to sell. Where borrowing is used, your property may be repossessed if you do not keep up repayments on a mortgage or other loan secured against it.
