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Unchained Capital Inc., a Bitcoin-based custodial service provider and lender, has raised $ 25 million in funding, valuing the company at $ 125 million.
The roundtable was led by New York Digital Investment Group LLC, a provider of Bitcoin-related financial services. NYDIG’s investment increases its minority stake in the business and includes an additional $ 100 million commitment to support loans issued by Unchained. NYDIG initially invested in the Austin, Texas-based company in February when it agreed to provide $ 50 million in loan capital, according to a statement from Unchained.
“Our existing partnership with NYDIG has generated significant value and the increased investment to lead our Series A will help further transform our business as a a leader financial institution for long-term Bitcoin holders, ”said Joe Kelly, CEO and co-founder of Unchained on Friday.
Unchained, which was founded in 2016, provides custody solutions and lends dollars to Bitcoin holders looking to take advantage of the gains they have made on digital currency without having to sell their coins.
As the price of Bitcoin has jumped to around $ 37,000 from less than $ 10,000 a year ago, Unchained has seen demand for its loan product increase.
The company’s annual execution rate, a measure of outstanding loans, has climbed to around $ 250 million, five times higher than six months ago, while the assets of its lending platforms and custody now exceed $ 1 billion, Parker Lewis, business development manager, said in an interview. Lewis also provided the $ 125 million valuation for the company.
“Historically, there has been a lack of investment in dedicated Bitcoin infrastructure, often in favor of platforms supporting many digital currencies, but Unchained Capital expects this increase to be the first in a growing trend of Bitcoin-only companies attracting capital investment on the scale that has long been deserved, ”Lewis said separately in the announcement Friday.
Unlike other cryptocurrency lenders, Unchained does not take the promised Bitcoin as collateral and lend it for profit, thus eliminating the counterparty risk for the borrower.
Additionally, when Bitcoin is used to secure a loan, Unchained stores the cryptocurrency in a so-called multi-signature account in which the borrower, lender and a neutral third party each receive a set of private keys. Two of the three keys are then needed to move the funds, but the borrower is able to verify that their Bitcoin has not been loaned.
Unchained caps loans at a maximum of 40% of the value of a customer’s Bitcoin deposited as collateral, and charges 11% for a period of one year, with a portion of these fees going to pay off the multi-signature service. The average loan amount is $ 100,000.
“This latest round of investment brings our total loan commitment with Unchained to $ 150 million,” NYDIG co-founder and CEO Robert Gutmann said in a statement. “We have the utmost confidence in Unchained’s leadership, vision and ability to execute with a sense of urgency, and we’re excited to help them unlock this next phase of growth. “
NYDIG is a subsidiary of Stone Ridge Asset Management LLC, an alternative asset manager overseeing $ 10 billion, according to NYDIG’S website.