Crypto lender Ledn has joined forces with crypto real estate broker Parallel, enabling investors to finance and acquire Cayman Islands properties by leveraging their digital assets.
The initiative helps crypto natives to secure a "Golden Visa" and permanent residency in the British Overseas Territory without having to sell their cryptocurrency or exchange it for fiat, according to a statement.
It works by allowing users to leverage their bitcoin for Ledn loans and subsequently purchase properties via Parallel in a compliant way. The loans start with a 50% loan-to-value ratio at an annual interest rate of 12.9%.
"As both companies are regulated by the Cayman Islands Monetary Authority (CIMA) as Virtual Asset Service Providers, this partnership is a testament to the framework that the regulator has put in place to encourage the responsible development of the crypto industry in the Cayman Islands," Ledn CEO Adam Reeds said in the statement.
The allure of the 'Golden Visa'
The "Golden Visa" is a part of citizenship-by-investment programs available in 22 countries globally, including Portugal, Spain, Italy and the U.S. (via the EB-5 Investor Visa). It offers investors a chance at permanent residency, leading to potential citizenship. In the Cayman Islands, the quickest path to residency requires a minimum real estate investment of $2.4 million.
No restrictions on foreign ownership and the absence of property, capital gains and inheritance taxes in the British Overseas Territory make it an attractive destination for investors.
Parallel sold its first home via cryptocurrency for more than $5 million in September 2022 and has facilitated purchases of property worth up to $12 million.
"No longer will our clients have to decide between holding on to their crypto or purchasing that luxury property on Seven Mile Beach — now they can do both," Parallel CEO Laura Birrell said.
Ledn co-founder and CSO Mauricio Di Bartolomeo told The Block there were no imminent plans to expand the initiative to other countries, but the company would monitor "uptake and feedback to determine how fast and how quickly to expand similar offerings."
Surviving the crypto credit crisis
The crypto loan sector suffered significant setbacks after a tumultuous year for centralized crypto lending services — a period that saw the collapse into bankruptcy of firms like Celsius, BlockFi, Voyager Digital and Genesis. It remains unclear the extent to which users will trust such services going forward.
"Obviously, it’s been a tough year for the digital asset industry, particularly lenders. But we’re still here, and we’re still extremely optimistic about the future of the industry," Di Bartolomeo said. "We’ve seen consistent and growing demand throughout 2023, especially after the Blackrock ETF announcement."
"We were able to survive because of our sound risk management program and our prioritization of the safety and security of our clients' assets," Di Bartolomeo continued. "Although we were criticized in the past for being too conservative, it was exactly this approach that allowed us to survive. While others were pursuing Assets Under Management at all costs, we focused on protecting the client assets we were entrusted with."
"From our point of view, the path to rebuilding confidence in the crypto lending industry is pretty clear — it involves all players making three key changes: adopting more prudent risk management policies, improving communication and disclosures to clients and developing better products that give clients more control," Di Bartolomeo added.
In an interview with The Block in April, Di Bartolomeo said that the company, which focuses on bitcoin and USDC loans, successfully navigated the crisis by diversifying away from its initial sole partner, Genesis.
Ledn's move to establish its own lending desk in May 2021 attracted many of Genesis' borrowers, further distancing Ledn from Genesis' potential liabilities. Unlike many crypto lenders, Ledn also chose not to work with the collapsed hedge fund Three Arrows Capital due to its strict onboarding requirements.
Ledn generates yield through its lending desk and by allowing customers to loan to each other, with a significant portion of capital providers based in developed regions such as Europe and borrowers in areas like Latin America.
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