The Geneva-based financial institution, Dukascopy Bank, has unveiled a new lending feature that permits clients to secure loans against their cryptocurrency holdings. This feature allows account holders to obtain 50% of their digital asset’s value in U.S. dollars, while maintaining their original cryptocurrency investments.
To utilize this service, clients are required to establish a multi-currency bank account (MCA) and deposit their chosen cryptocurrency. Subsequently, within the “Investments” category, users can opt for the “Crypto lending/borrowing” function. As stated by the bank in its official press release:
Within your MCA account, half of your crypto investment’s market value will appear as fiat currency.
Upon executing a “Trading Agreement,” clients are furnished with login information for a trading sub-account. Here they will find an additional 50% of their digital asset’s market value in fiat currency, held as collateral, along with their cryptocurrency investment as an open trading position.
For instance, depositing 0.1 Bitcoin (BTC) into your MCA account would yield $1,405 and some change (at current valuation) in your bank account, as well as an identical amount in fiat currency in your trading sub-account, as per the bank’s online calculator.
In addition, Dukascopy will automatically open a long margin position of 0.1 BTC/USD in the trading sub-account. The bank emphasized that all these transactions are automated and a 1% commission fee is levied on the incoming cryptocurrency transfer.
This latest offering by Dukascopy Bank, regulated by the Swiss Financial Market Supervisory Authority, emerges during a turbulent period for the broader cryptocurrency market and the crypto lending sector specifically, amid rising regulatory scrutiny and notable bankruptcies like those of Celsius and Voyager.
Do you anticipate a rise in crypto-backed lending services from traditional banking institutions in the foreseeable future? Please share your thoughts in the comments section below.
Frequently Asked Questions (FAQs) about Dukascopy Bank Crypto-Backed Lending Service
What is the new service offered by Dukascopy Bank?
Dukascopy Bank has introduced a crypto-backed lending service that allows clients to secure loans in U.S. dollars against their cryptocurrency holdings. Clients can obtain up to 50% of their digital asset’s market value in fiat currency while retaining their original cryptocurrency investments.
How can clients avail themselves of this crypto-backed lending service?
To use this service, clients must first open a multi-currency bank account (MCA) with Dukascopy Bank. They must then deposit the cryptocurrency they wish to use as collateral. Once this is done, clients can navigate to the “Investments” section within their MCA account and select the “Crypto lending/borrowing” option.
What is the significance of the “Trading Agreement” in this service?
Upon signing the “Trading Agreement,” clients will receive login credentials for a separate trading sub-account. In this sub-account, they will find an additional 50% of their cryptocurrency’s market value in U.S. dollars, which will serve as collateral. Additionally, their cryptocurrency investment will be maintained as an open trading position.
Are the operations in this lending service automated?
Yes, all operations related to this crypto-backed lending service, including the opening of a long margin position in the trading sub-account, are automated. Dukascopy Bank has made this clear in their official press release.
What fees are associated with this service?
A commission fee of 1% is applied to the incoming cryptocurrency transfer to the multi-currency bank account (MCA).
How does this new service fit into the current financial landscape?
This new offering by Dukascopy Bank comes at a time when the cryptocurrency industry, and the crypto lending sector in particular, are facing increased regulatory scrutiny and challenges, including high-profile bankruptcies such as those of Celsius and Voyager. The bank is regulated by the Swiss Financial Market Supervisory Authority.
What happens if I deposit 0.1 Bitcoin into my MCA account for this service?
If you deposit 0.1 Bitcoin (BTC) into your MCA account, you would receive $1,405 and some change (based on current valuations) both in your bank account and in your trading sub-account, according to the bank’s online calculator.
Can clients choose other cryptocurrencies besides Bitcoin?
The original text does not specify if cryptocurrencies other than Bitcoin can be used for this lending service. Clients should consult with Dukascopy Bank for detailed information on which digital assets are eligible for this program.
More about Dukascopy Bank Crypto-Backed Lending Service
- Dukascopy Bank Official Press Release
- Swiss Financial Market Supervisory Authority
- Current Bitcoin Valuation
- Celsius Bankruptcy News
- Voyager Bankruptcy Update
- Multi-Currency Bank Account (MCA) Information
- Crypto Lending Sector Analysis