Fidelity To Offer Bitcoin-Backed Loans Through Nexo

Lending institution Nexo has teamed up with the custodian to explore innovative products and tri-party lending agreements to institutional investors.

Lending firm Nexo has partnered with institutional custodian Fidelity to bring professional bitcoin products to market, the company said in a statement Tuesday. The lender will leverage Fidelity’s enterprise-grade infrastructure to expand institutional access to its prime brokerage platform.

“As a first step, the collaboration with Fidelity Digital Assets will expand Nexo’s ability to service and enhance its growing portfolio of assets under management and will provide an additional custody layer to Nexo’s military-grade security infrastructure,” per the statement.

Nexo said the partnership would enable it to explore the development of new products for institutional investors, including tri-party structures for bitcoin-backed loans. Wall Street banks are also reportedly exploring ways to do institutional cash loans with bitcoin as collateral by emulating tri-party agreements. The model, popular in traditional finance, leverages a third-party agent to ensure the proper delivery of cash and the underlying assets to each party as per the agreement terms.

It isn’t the first time Fidelity Digital Assets has dabbled in bitcoin-backed loans. In December of last year, Bloomberg reported that the custodian had tip-toed into the space in collaboration with BlockFi. In March, it extended its bitcoin-backed loans by adding Silvergate as a partner. Now, Nexo is the latest lender to leverage Fidelity’s institutional custody and trading platform for the service.

“Working with Fidelity Digital Assets is the latest milestone in our quest to offer a complete institutional platform and to onboard traditional finance companies into the digital asset ecosystem,” Kalin Metodiev, co-founder and managing partner at Nexo, said in the statement. “Our client base will now have full use of our industry-leading credit and trading products with reliance on Fidelity Digital Assets’ bespoke custody and security solutions.”

Nexo says it serves more than 2.5 million customers in 200 jurisdictions, offering bitcoin-backed loans in over 40 fiat currencies.