Former Cantor Executives Launch Lending Platform for Anticipated Spot Bitcoin ETFs

Nov 8
A group of former executives from Cantor Fitzgerald have started a crypto-lending platform, hoping that, once US regulators approve it, it will help operators of spot Bitcoin exchange-traded funds.

The Jersey City, New Jersey-based business Digital Prime Technologies said on Tuesday that its Tokenet product already enables users, including Xapo Bank, to lend digital assets to third parties, including EDX Clearing and the international institutional lending network Hidden Road Partners.

Users can handle loans with the setup's chat function and risk management features.

The company launched a new product to fill the hole created by the failure of cryptocurrency lenders Genesis, Celsius, BlockFi, and others. It also joins a plethora of exchanges and other businesses, such as Swan Bitcoin. Due to the lack of options presented to market players by the collapse of the cryptocurrency loan sector last year, trading volumes in 2023 were lower.

The launch also comes amid mounting hope that a Bitcoin-specific ETF will be authorized in the US in the coming months. If this occurs, ETF issuers should be quite eager to borrow Bitcoin, according to Digital Prime, which will help the nascent crypto lending sector.

The CEO of the business, James Runnels, described it as "almost like a rebirth of crypto lending" in an interview.

According to him, approved participants can borrow Bitcoin and purchase it at a later time when the price drops if they need to add additional holdings to an ETF, but the price of the cryptocurrency increases unexpectedly.

When demand for an ETF increases, authorized participants, who are specialized traders, can collaborate with the issuer to produce more shares. To limit supply and keep the price of the ETF at its net asset value, participants buy back those shares from the fund sponsor when their buying appetites drop.

Until 2018, Bob Sherry, the COO of Digital Prime, served as the executive director of Prime Services at Cantor Fitzgerald, while Runnels held the position of managing director.
The Financial Industry Regulatory Authority granted membership to Digital Prime subsidiary DLCC Prime last year, enabling it to function as a broker-dealer registered with the Securities and Exchange Commission. Seed money for Digital Prime has come from investors such as TD Cowen Inc.

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