Risks Loom as Crypto Collateral Gains Ground in Lending

Crypto, in all of its forms, is poised to move more mainstream, blurring lines between traditional and decentralized finance.

The GENIUS Act is gaining its share of attention this week, moving toward establishing a federal stablecoin framework amid news that the Senate passed the bill on Tuesday (June 17), sending it to the House. In other recent announcements, we’re seeing the rise of bitcoin as a form of collateral in loans issued by big banks — used an inputs to determine applicants’ net worth and liquidity, and by extension, loan terms.

JPMorgan is a key example. The bank said that earlier this month that it would begin offering loans to clients, where bitcoin ETFs such as BlackRock’s iShares Bitcoin Trust would be used…

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