Genesis hits record growth in crypto loans in Q2, reaching $2.3 billion-mark since launch

Genesis Global Capital, the lending arm of institutional over-the-counter cryptocurrency trading firm Genesis Global Trading, continues to get bigger as loan origination growth hits a new record.

The New York-based firm added $746 million of crypto loans in the second quarter, bringing its total originations to $2.3 billion since launching the business in March 2018, according to a Q2 lending snapshot report published Tuesday.

The quarter-on-quarter growth hit 48% as compared to $1.53 billion in total originations as of March 2019. Moreover, Genesis’ portfolio of outstanding loans grew sharply by 149% to $452 million as of June 30, as compared to $181 million in the previous quarter. 

Michael Moro, the firm's CEO and a former Wall Street trader, told The Block that the growth in Q2 served as a learning opportunity for how the business would perform during a bear market. The business existed mostly during the bear, during which period investors increasingly used Genesis' crypto loans as a method to short. 

"I think coming in 2019, we were trying to figure out how this would work in a bull market," Moro said. "I think when we look back at 2018, we saw that the bear market was a tailwind to getting the business up and off the ground."

"This second-quarter report answers that question."

Cash and Stablecoins

The report credited the growth in Q2 from a “strong uptick” in the borrowing of U.S. dollar and stablecoins, as well as an increase in bitcoin (BTC) price.

The firm’s USD and stablecoins lending (Paxos Standard or PAX and Circle’s USD Coin or USDC) now constitute nearly a quarter of the active book, increasing over 100% from last quarter, per the report.

“There is strong demand, especially internationally, to borrow USD,” and as cross-border wires can be “inconsistent,” the USD demand translates to stablecoins, which are pegged to the dollar, Genesis said.

Giving the reasons for higher demand for cash borrowing, Genesis said the increasing contango, a situation when the futures price is above the expected future spot price, in the bitcoin and other crypto futures market was one of the factors. The opportunity to capture a basis spread between futures and spot also contributed to the demand, per the report.

Genesis concluded that it expects to witness “continued growth” for the rest of the year. Back in May, Moro told The Block that the firm could announce 3-4 new initiatives within the lending arm to make it more aligned to needs of Wall Street institutions.

Earlier this month, Genesis Global Trading announced that it is expanding into Europe as it hired a general counsel to advise on legal matters in the region, among other appointments to strengthen its leadership team.