Toronto-based crypto lender Ledn is setting its sights on expanding services in the U.S., particularly the West Coast. The company has recently submitted an application to the state of California, according to co-founder and CEO Adam Reeds. He believes the increasing price of Bitcoin and the growing number of Bitcoin owners will help justify the costs of expansion into new territories.
Founded in 2018, Ledn is one of the few remaining major centralized crypto lenders following a series of high-profile collapses in the sector in 2022. A report from Galaxy Digital reveals that Ledn, together with Galaxy and stablecoin issuer Tether, accounted for 90% of the $11.2 billion in outstanding loans as of 2022 year-end.
Despite the current metric still lagging behind the 2022 peak of $34.8 billion, largely driven by now-defunct firms such as BlockFi and Genesis, Reeds is optimistic. With financial giants like Cantor Fitzgerald developing its own Bitcoin financing branch, he anticipates significant market shifts.
The majority of Ledn’s business concerns lending U.S. dollars to individuals who prefer not to sell their Bitcoin, extending loans as small as $500. The entrance of institutions like Cantor Fitzgerald could potentially drive down Ledn’s capital costs and enable the firm to offer services at a more affordable rate to clients.
The move towards crypto lending is becoming less of a daring venture and more of a boardroom necessity, with competitors likely to follow Cantor Fitzgerald’s lead, according to Adams.
Despite the former SEC Chair and crypto skeptic Gary Gensler’s emphasis on enforcement actions, which critics argue stifled innovation and deterred traditional finance firms, Ledn continues to operate under a range of lending licenses across the U.S. Currently, it is active in 39 states, with California and Tennessee being the largest in terms of population.
Adams is optimistic that Ledn could eventually be licensed across all 50 states. Meanwhile, a large proportion of the $1.5 billion worth of assets on Ledn’s platform is linked to the Global South. The firm’s overall asset base has surged by 140% in the past year.
Ledn has seen significant growth in countries with poor property rights, providing users with equal access to capital when traditional assets like land cannot be used as collateral.
Zack Pokorny, a research analyst at Galaxy, believes that more competition in the crypto lending space will result in lower fees and increased liquidity, making loans more affordable. He predicts that the cost of operations will decrease, coupled with a potential reduction in the cost of capital.
However, Pokorny adds that centralized crypto lenders are still dealing with the aftermath of the 2022 sector shake-up. Yet, the space is gradually becoming more transparent, with users shifting towards decentralized finance (DeFi). Bitcoin is now a widely accepted form of collateral, echoing Ledn’s core business model.
Edited by James Rubin and Stacy Elliott.
