Startup offers instant crypto-backed loans
Nexo’s instant lending platform is backed by cash liquidity, so clients don’t have to sell cryptocurrencies.
Nexo is claiming to be the first lending platform to offer cryptocurrency-backed cash loans to consumers.
Other crypto-backed lenders typically pair borrowers with individuals seeking to loan out their own funds. However, Nexo, which raised $50 million via investors, will utilize these funds to provide liquidity for loans.
It is not possible to easily leverage a digital asset in order to pursue a lucrative investment opportunity or meet a short-term liquidity need without having to sell assets bearing upside potential, according to Nexo.
Using Nexo’s lending platform, clients retain 100% ownership of their digital assets. Without the need to sell them, borrowers retain full benefits from their assets’ value appreciation. Nexo utilizes military grade BitGo encryption, the same used by digital exchange Kraken, to secure assets and allow for the safe transfer of funds.
How does it work?
Clients transfer cryptocurrency to Nexo’s digital wallet. They will receive an instant loan in either fiat currency (USD, EUR, etc) or cryptocurrency. Loan limits are based on the market value of the assets stored in the digital wallet. Clients can then access this sum anywhere around the world via bank transfer, cryptocurrency or by using Nexo’s free credit card. Additional credit is automatically and instantly available on the card upon appreciation of a client’s cryptocurrency value. There are no monthly or annual fees, nor any hidden charges.
Clients can repay their loans using fiat currencies (USD, EUR and JPY). They can also make repayments using NEXO tokens, which offer a discount on the interest. If a client’s cryptocurrency asset has met their price target, they may place an order with the Nexo Oracle to sell a fraction of the asset to repay any outstanding balances.
Finally, once repayments are made, clients can retrieve their cryptocurrency from the Nexo wallet.
Nexo is powered by European fintech group Credissimo. Credissimo utilizes proprietary technology to provide instant online consumer loans, e-commerce financing and bill payment services in several European countries.
Nexo is supported by influential financial backer, startup adviser and TechCrunch founder Michael Arrington.
“I haven’t seen anyone do a good job so far of providing liquidity for people who have cryptocurrencies without forcing them to sell the cryptocurrency, or to put it more succinctly, provide a proper credit line to people who own cryptocurrencies,” Arrington told CoinDesk during a recent interview.
Last week, Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) completed the world’s first end-to-end corporate loan transaction using blockchain technology, eliminating complexities and providing a transparent process.
The latest survey data has revealed that one in five United States’ financial institutions are examining the possibilities and ramifications of trading digital currencies, such as bitcoin, sometime in the next year.
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You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.