Japanese Financial Giant SBI Group to Borrow from Bitcoin Holders at Annual Rate of 1%

Strategic Business Innovator (SBI) Group or SBI Holdings has rolled out a cryptocurrency rental service dubbed “VC TRADE LENDING” aimed at borrowing crypto assets from customers in exchange for a usage fee based on the period and quantity of lending. The Japanese financial giant with a market cap of around $4.4 billion seeks to offer more trading opportunities in the crypto space.

Bitcoin holders to be the first beneficiaries

As per the announcement:

“VC TRADE LENDING is a service that allows customers to rent out their cryptocurrency assets to us and receive usage fees according to the quantity and period of cryptocurrency assets.”

SBI Group will borrow a minimum of 0.1 Bitcoin (BTC) to a maximum of 5 BTC from holders at an annual interest rate of 1% with the minimum lending period being 84 days. This will work just like regular savings account in a bank, whereby a client lends out fiat money and accrues a yearly interest payment. In comparison, the bank uses these funds for economic services like loans. The company expects to expand this service to other cryptocurrencies like Ethereum (ETH) and Ripple (XRP) in the near future.

Treading with caution

The Tokyo-based financial institution noted that Bitcoin’s volatility was still a concern. Consequently, it needs to tread with caution when dealing with this new crypto lending service. 

The rollout of this initiative comes at a time when BTC has been on a massive price rally. Notably, it is a stone's throw away from the all-time high of $20,000 because it is currently trading at around $19,000. Furthermore, on-chain analytics platform ChartsBTC recently revealed that the Bitcoin trend in 2020 is outperforming the post-halving bull run of 2016.

SBI Group acknowledged that it intended to transform the crypto lending sector because it has suffered from counterparty risks like bankruptcy and defective smart contracts. It stated:

“All of our customers’ lending destinations for our cryptocurrency lending service are SBI Group companies that boast high reliability, so you can use it with confidence.”

By formulating appropriate products, this financial institution seeks to optimize crypto trading opportunities that are market-based.