What is Crypto-lending? How it works, when to use it, and its future in Canada's financial markets

This article was originally published on Lexpert.ca

The rise, fall, and rise again of cryptocurrencies has been well documented. However, the ramifications of their increasing acceptance are not yet fully clear – a fact that is clearly apparent in the field of commercial lending. Due to the unique nature of digital currencies, they can be used in more innovative and diverse ways than cash or traditional financial instruments. This has led to the advent of crypto-lending, a new financial industry that utilizes these currencies as securities for loans. However, regulation and market structure are not yet fully standardized, making this space a rapidly evolving one for those parties willing to accept its risks. We asked two members of Gowling WLG's Financial Institutions & Services Group in Canada, David Cohen and Thomas Gertner, to brief us on what crypto-lending is, how it works, and what it means for the future of commercial borrowing and lending.

Crypto-lending: The future of commercial funding?

Commercial crypto-lending is an emerging industry in Canada that sees lenders advance borrowers cash or digital currency (more often than not cash), while taking traditional and not so traditional "security" over cash, digital currency or a combination of the two.

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