The interest rate cut from the US Federal Reserve (Fed) has led to a surge in demand for crypto lending services. Blockchain-powered lending platform Figure Technologies saw a threefold increase in loan applications.
Fed’s Stimulus Encourage Consumers to Borrow More
Last Tuesday, the Fed cut the interest rates by 0.50% to a target range of 1.00% to 1.25%. For many crypto lending applications, that was a great stimulation.
Figure Technologies, which itself leverages blockchain to transform the crypto lending market, said that it had seen loan applications surging by 300% during the last week. Thus, the total amount of loans that the company has funded hit over $1 billion.
Figure co-founder and CEO Mike Cagney commented:
The 300 percent increase in applications suggests consumers are eager to take advantage of unprecedented lower rates across mortgages, HELOCs and student loan refinancing. Consumers will benefit through lower debt costs and, for cash-out refi and HELOCs, more cash on hand.
Cagney, who also founded personal finance firm Social Finance (SoFi), said that Figure was the first “de novo” fintech to hit $1 billion in funded loans that fast. He explained that the company’s success was guaranteed thanks to its proprietary blockchain platform Provenance, which is focused around crypto lending solutions.
Meanwhile, fundamental factors like the Fed’s decision to ease the monetary policy are encouraging consumers to borrow more. The central bank is trying to curb the effect of the coronavirus epidemic.
Figure said that the average size of loans applied after the Fed’s rate cut is about $50,000 per household.
Blockchain.com Launches New Crypto Lending Service
While it’s not necessarily related to the Fed’s move, Blockchain.com, one of the leading crypto wallet providers, launched Borrow. The latter is a new product that allows users to borrow dollar-denominated stablecoins against cryptocurrencies, including Bitcoin, that is held in its wallet.
The launch comes after the company introduced in August a lending desk aimed at institutional investors.
Peter Smith, co-founder and CEO of Blockchain.com, commented:
Institutional and retail investors have the same financial goals – grow wealth and manage risks – but the tools at their disposal are vastly different. Now, with our suite of trading products and Borrow, retail users can trade like the big guys without selling the crypto they’ve stockpiled or leaving their Wallet.