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Everything Private Advisors Should Know About Crypto Finance

4th March 2022
Islay Robinson GROUP CEO

Islay Robinson

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Everything Private Advisors Should Know About Crypto Finance
GROUP CEO

Islay Robinson

Crypto finance is increasingly sought-after, especially given many investors have been propelled into ultra- and high-net-worth territory as a result of increasing valuations. If you work with these individuals, they may be turning to you as an adviser to help them raise finance against cryptocurrencies. However, although cryptocurrencies are increasingly mainstream, using these assets as collateral for a loan remains challenging, given mainstream banks and lenders do not offer this type of finance.  

Benefits

Your clients can use crypto finance for everything from buying real estate to diversifying a portfolio, investing (either in more crypto or in public markets), growing a business, creating liquidity and so on. Learn more about crypto real estate here.

Crypto loans are advantageous because your clients can leverage their cryptocurrencies without liquidating these assets. Given that mainstream cryptocurrencies are expected to continue to rise long-term, going long on crypto is likely preferable to selling these to create liquidity. Borrowing against cryptocurrencies means your client will not lose out on any future upside of their holdings.

Borrower profiles

We broker high-value crypto finance for individuals that hold significant, mainstream cryptocurrencies. ‘Cryptonaires’ can have different profiles from other high-net-worth individuals. They may have generated considerable wealth quite quickly, may not have a diversified portfolio of other assets or need a loan fast to create much-needed liquidity. We can broker finance in all these scenarios, even if your client has been turned down for crypto finance in the past.

Risks

If your client has a solid financial position, borrows a reasonable amount against their assets and has a good exit plan, crypto finance is not inherently riskier than any other type of borrowing. Crypto finance lenders offer lower LTVs than would be seen in other parts of the market (e.g., bridging loans, mortgages, portfolio finance) so they can easily absorb fluctuations in value. LTV of about 50% is typical, but this can change from lender to lender.

How much can my client borrow? 

As with any kind of lending: it depends, although high-value borrowing is a very real possibility. There is no official upper limit on this type of lending, but the amount your client can borrow will ultimately be dependent on lender appetite, your client’s profile, financial background (i.e., if they have other assets or their wealth is almost exclusively in cryptocurrencies) and how much they want to borrow. Multi-million-pound crypto loans are common, and we specialise in brokering these deals.  

Lenders tend to have minimums they will lend against, however. A minimum loan amount of £100,000 is normal, but again, this can vary from lender to lender. 

Lenders

The lenders that offer high-value crypto finance are crypto experts and have truly exceptional knowledge of these assets. Some lenders provide crypto finance alongside other highly specialised services in the digital assets space. 

As an adviser, the calibre of the lender your client uses or that you introduce them to via Enness’ brokers is paramount. We have relationships with reputed, high-profile lenders with very clear authority in their space and who are affiliated or registered with relevant regulators or industry bodies. Our network of crypto finance lenders will be able to work closely with you as an adviser and can cater to any structuring requirements your client has.  

My client isn’t based in the UK. Is lending still an option?

Yes. Cross border finance is relatively common in crypto finance deals, and lenders can offer international loans. Enness can broker lending for your clients wherever they are based. We regularly work with clients and advisers based in North America, Europe and Asia, as well as those in the UK.

Why Enness For Crypto Finance?

For high-value finance (anything over six figures), brokering this finance can make all the difference in terms of getting the best rates or the terms your client wants. Smaller deals are typically much easier to organise yourself on behalf of a client, and a finance broker may not be necessary.

There are relatively few players that offer high-value crypto finance, which means that you will likely source very different rates from lenders if you are operating alone. In essence, there is not yet enough competition between lenders to bring rates to a similar level – every loan will be priced differently and have different conditions. Here, it’s important to know that the cheapest rates won’t always be the best fit for your client. Sometimes, for example, borrowing more and paying a little more for the ability to do so is far more beneficial to your client than just accepting the cheapest rate.  

Negotiations can be challenging if you approach lenders directly. With relatively few lenders in the market, you will soon run out of options if you are continually seeking out other lenders because you have been turned down or don't like what a particular lender offers. Here, Enness will come into their own. Lenders do not like hardball negotiations. We understand what crypto finance lenders want to see, how to present your client’s case and what will maximise what your client can borrow. We will get your client the most flexible terms and minimise your client’s overhead lending costs, securing the best (and sometimes only) deal available on the market for your client.