Some cryptocurrency investment companies and funds from China have switched to the lending market, as it brings a steady income even in a bear market.
In the list of the companies, there are well-known names like FBG Capital, Bixin Capital and DGrouр. These companies together with the Babelbank startup, have issued loans of $60 million, in the past 5 months. Moreover, the huge part is cryptocurrency. However, one fund works also with the Yuan, which carries with it increased risks associated with regulatory issues.
Representatives of the companies reported that such services are especially popular among local retail investors, hedge fund traders and even crypto miners, who rely on the fact that Bitcoin price will rise over the next few months, so they borrow money in USDT, which is then transferred to the Yuan to pay the electricity bills.
Xi Wang, head of financial markets at Bixin Capital, “The situation in the cryptocurrency market does not have a very noticeable effect on personal loans, so in a bearish cycle it is more profitable to get stable income by issuing loans”.
All of the above companies provide a slightly different service than traditional financial institutions. “If traditional banks look at the borrower’s education, credit rating, stable income and other variables, for us the only important thing is mortgage-backed security. This kind of system allows to intelligently control risks”.