It seems like the world of crypto lending is quietly shifting. Not in a flashy way, but in the practical details of how loans are actually backed. Fabian Dori, who leads investments at Sygnum Bank, points out something that makes a lot of sense when you think about it. Lenders, he says, have a strong preference for collateral that’s held directly on the blockchain. Not the ETFs that are becoming popular, but the actual tokens themselves.
Why On-Chain Collateral Just Works Better
The reasoning is pretty straightforward. It comes down to liquidity and control. Dori explained that when collateral is held on-chain, it’s simply more liquid. This allows a lender to act immediately if they need to. Think about a margin call. If a borrower’s collateral value dips, the lender can liquidate it right then and there. 24 hours a day, seven days a week. That’s not really possible with an ETF that trades only when traditional markets are open.
“It’s actually preferable to have the direct tokens as collateral,” Dori told Cointelegraph. Trying to handle a margin call on an ETF late on a Friday night? Basically impossible. That real-time ability gives lenders more confidence, and they apparently pass that on to borrowers in the form of higher loan-to-value ratios. A higher LTV means you can borrow more against your crypto holdings.
A Niche Sector Slowly Finding Its Feet
Let’s be honest, the whole concept of crypto-backed loans is still pretty new. The sector took a massive hit during the 2022 downturn, with several high-profile lending firms collapsing. That’s not something people have forgotten. But activity is picking up again, cautiously. Dori seems to think this is just the beginning, that growth will follow as more people get comfortable with digital assets.
It’s not just crypto-native companies anymore, either. The idea is slowly seeping into the traditional finance world. We’re seeing signs of this gradual acceptance. Figure Technology, a company focused on this exact type of lending, just went public on the Nasdaq. Its stock popped on the first day of trading, which suggests there’s some investor appetite for this model.
The Big Players Are Starting to Look
Perhaps the biggest signal that this isn’t just a fringe idea is the news that JP Morgan is considering offering crypto-backed loans. We’re talking about one of the most established banks in the world. Their timeline for a potential 2026 launch shows they’re moving carefully, but the fact that they’re even exploring it is significant.
It feels like a quiet validation for the entire concept. Of course, the risks are still very real. The volatility of crypto is legendary, and using it as collateral for a traditional loan is inherently risky for everyone involved. But the mechanics, as Dori outlines, are becoming clearer. For lenders, having direct control over the asset, anytime and anywhere, might be the key that makes it all work.
