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Ledn, a cryptocurrency lending firm, has closed a $188 million sale of Bitcoin-backed bonds, marking the first deal of its kind in the asset-backed securities (ABS) market, according to announcements on Thursday.
The bonds are secured by over 4,000 Bitcoin (BTC), bridging retail lending with capital markets, and represent a significant step toward mainstream acceptance of crypto-backed financial products. Jefferies Financial Group acted as the sole structuring agent and bookrunner for the deal. The investment-grade portion of the notes was priced at 335 basis points over the benchmark rate.
The move signals a potential turning point for the crypto credit market, which suffered significant setbacks following the collapses of BlockFi and Celsius in 2022. Those failures eroded trust in crypto lending, prompting institutions to pull back. Ledn’s successful bond sale demonstrates a renewed appetite for regulated and transparent yield-generating opportunities within the digital asset space.
According to S&P Global, the majority of the notes received a BBB- rating, despite concerns about Bitcoin’s volatility. The rating agency’s stress tests assumed a 79% default rate at the “A” level, even with significant overcollateralization. The initial Bitcoin stash backing the bonds was valued at approximately $356.9 million at the time of S&P’s review.
Ledn has originated billions in loans since 2018, and the company is positioning itself as a more cautious player in the crypto lending landscape. The bonds are backed by 4,078.87 BTC. The weighted average interest rate on the underlying loans is 11.8%, according to Bloomberg reporting.
The deal’s structure involves asset-backed securities, where bonds are backed by a pool of underlying loans. Investors receive payments from the cash flows generated by those loans. This approach is common in traditional finance, with mortgage-backed securities being a prime example.
The development comes as even traditionally skeptical financial institutions are beginning to explore Bitcoin’s potential as collateral. JPMorgan Chase, whose CEO Jamie Dimon previously dismissed Bitcoin as a fraud, is reportedly working to accept Bitcoin as collateral.
Firefish, a leading platform for Bitcoin-backed loans in the EU, is now providing its data through the London Stock Exchange Group’s (LSEG) Workspace analysis platform, making Firefish interest rates accessible to over 400,000 financial professionals. Unlike Ledn, Firefish offers Bitcoin-backed loans with longer terms, with 12-month loans currently available at interest rates below 10% and falling.