The new front-to-end platform offers users all relevant risk-management tools for both borrower and lender, manages liquidations and provides automated margin notifications for borrowers.
TORONTO, June 24, 2024 (GLOBE NEWSWIRE) -- FRNT Financial Inc. (TSXV: FRNT) (OTCQB: FRFLF) (FSE: XZ3) (“FRNT” or the “Company”) is pleased to announce its partnership with BitGo, a leading qualified custodian in the digital assets space, and the launch of its new institutional-only lending platform, aiding the origination and maintenance of BTC and ETH-backed loans. The platform offers significant advantages to both lenders and borrowers over existing industry structures.
FRNT's new lending interface leverages a tri-party structure to mitigate counterparty risk by using a bankruptcy remote third-party custodian, BitGo, ensuring that the collateral is securely held in cold storage and cannot be rehypothecated. FRNT’s solution minimizes the lender’s required engagement while maintaining the benefits and safety of a tri-party structure. Unlike traditional tri-party lending arrangements that demand a high degree of involvement from the lender, FRNT’s platform requires the lender only to provide the balance sheet, with FRNT’s technology handling all loan monitoring. This streamlined approach offers significant advantages, providing lenders with peace of mind and returns, while borrowers can access liquidity without selling their BTC or ETH, maintaining potential upside in their investments.
“Our platform is designed to provide a seamless and secure lending experience for institutional clients,” said Giles Colwell, Head of NA Capital Markets at FRNT. “With 24/7 monitoring, automated margin calls, and a robust liquidation management process, lenders can confidently lend against BTC and ETH without the need to handle the physical assets.”
Key features of the new platform include:
Overcollateralization: Loans are typically structured with a starting Loan-to-Value (LTV) ratio of 50%-70%. No Rehypothecation: Collateral is held with BitGo, a qualified custodian, and remains in bankruptcy-remote cold storage, providing an additional layer of security. Automated Management: The platform offers 24/7/365 trading capabilities, deep liquidity, and real-time monitoring of collateral health, margin levels, and liquidation points. Auditability: Utilizing the public BTC and ETH blockchains ensures all transactions are transparent and can be audited in real-time, enhancing trust and security.
The platform aims to address the growing demand for digital asset-backed lending solutions. As the market for BTC and ETH continues to mature, the availability of a secure and efficient lending platform presents a significant opportunity for both lenders seeking yield and borrowers looking to leverage their digital assets without selling them.
“We are excited to partner with FRNT and leverage our extensive collateral management capabilities to assist them in growing their lending platform,” said Adam Sporn, BitGo’s Head of Prime Brokerage and U.S. Institutional Sales.
“Crypto-backed loans are a key component in institutional integration into the digital asset ecosystem,” added FRNT CEO and co-founder Stéphane Ouellette. “For lenders, FRNT’s platform provides a unique opportunity to diversify lending book exposure to a less correlated asset class. For borrowers, FRNT’s platform offers a secure and transparent means to access dollar liquidity while maintaining long exposure to the collateralized asset. We’re further extremely excited to be announcing this launch with BitGo, one of the longest serving and trusted names in digital asset custody.”
About FRNT FRNT is an institutional capital markets and advisory platform focused on digital assets. FRNT, through a technology-forward and compliant operation, aims to bridge the worlds of traditional and web-based finance. Partnering with both financial institutions and crypto native firms, FRNT operates 5 synergistic business lines including deliverable trading services, institutional structured derivative products, merchant banking, advisory and consulting, and principal investments & trading. Co-founded in 2018 by CEO Stéphane Ouellette, FRNT is a global firm headquartered in Toronto, Canada.
About BitGo BitGo is the leading infrastructure provider of digital asset solutions for businesses, offering custody, wallets, staking, trading, financing and settlement. Founded in 2013, BitGo is the first digital asset company to focus exclusively on serving institutional clients. In 2018, it launched BitGo Trust Company, the first qualified custodian purpose-built for storing digital assets and established BitGo New York Trust in 2021. In 2022, BitGo launched institutional-grade DeFi, NFT and web3 services. BitGo also supports over 800 digital assets on its platform and provides the security and operational backbone for more than 1500 institutional clients in 50 countries, including many of the world’s top cryptocurrency exchanges and platforms. For more information, please visit www.bitgo.com.
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