Lenders in the cryptocurrency industry are increasing day by day. As per report published by the Commerce Department showed U.S. gross domestic product rose at a 2.1 percent annual pace in the fourth quarter and for the full year the economy widened 2.3 percent. According to a reputed trading firm, loans increased by 21 percent during the fourth quarter to $545 million because of the demand of big investors and aggregators of small loans in Asia and Europe.
This growth was more than 10 times the pace at New York-based JPMorgan, a commercial and investment banking institution. We hardly have established banks for loans to crypto traders and businesses due to hard restrictions of regulators and conservative risk-management policies. But an increment has been seen among borrowers who want loans denominated in bitcoin, cash or stablecoins whose price is linked to fiat currencies and there are a huge number of investors intent to pledge cash to lenders.
BlockFi, the cryptocurrency lending service, planned to add five to 10 new assets to its platform and to launch a credit card that offers rewards in bitcoin. Another crypto lender platform Celsius Network was also getting loan growth from its key contributor. In terms of maturity and size, crypto banking sector cannot yet be compared to traditionals. Reportedly, Bitcoin surged 94 percent in 2019. By the starting of the month, bitcoin is up another 30 percent to about $9,300. Another company said that total assets were flat in the fourth quarter at $2.13 billion.
Transactions on Silvergate Exchange Network rose by 17 percent from third-quarter levels and the exchange will allow customers to obtain U.S. dollar-denominated loans collateralized by bitcoin. A report from Genesis assumed that a new source of demand for cash loans in 2020 could come from mining companies that need capital to build. It is assumed that miners leverage their existing balance sheet and treasury to source the cash necessary to invest in their operation.