Crypto lender PawnHub, known by its clients for providing easy access to crypto loans, while maintaining liquidity of their collateralized digital assets, has moved into the realm of financial legitimacy with its latest development: a full license from the Government of Hong Kong.
This means the crypto lender is now recognized as regulatory compliant in Hong Kong, one of the blockchain hubs of the world, moving ahead of its peers in neighboring blockchain jurisdictions such as China, South Korea, Japan and Singapore further to the South.
And to add on to that comes the news of a partnership secured with one of the oldest crypto custodians in the world, Coinbase Custody, which translates to insurance coverage for all PawnHub clients regardless of location for a total sum of up to USD 100 million.
These developments put PawnHub firmly on the map of crypto enterprise, and its business of crypto lending firmly into the spotlight as one of the year’s emerging trends in decentralized finance.
Crypto lending, the industry to watch out for in 2020
Cryptocurrencies are now almost part of financial literature and economics already, with ten years of Bitcoin and its immense price potential sure to have captured the minds of the wealthy and the curious alike. But while it may be commonly used as money these days, crypto still is in its early stages of utility in more traditional financial instruments such as loans and bonds, that are still more common with national fiat than with crypto.
One example is when looking at the world’s largest asset classes — global stock markets and residential real estate — and their worth at $217 trillion compared to the $244 trillion global debt, the debt-to-asset ratio is at 80%.
Compare this to the 2% debt-to-asset ratio in the digital asset industry that is worth some $200 billion and counting, and it becomes clear that crypto is hugely under-leveraged, with plenty of growth potential in the crypto lending sector left to explore.
A sound business model in an untapped sector
While the opportunity is clear, PawnHub’s business model makes it even more attractive, since, unlike other ways of collateralizing assets, crypto borrowers still retain ownership of their crypto, yet are able to gain instant access to liquidity thanks to decentralization and smart contract technology. That Bitcoin is proven to be fungible, divisible and in most cases instantly transferrable, users on PawnHub are free to take out loans with their crypto holdings, and diversify their investment into other sectors while retaining their crypto.
And now, as the first licensed crypto lender in Asia, and with a $100 million insurance fund from a recognized crypto custodian, PawnHub is uniquely positioned to introduce this sector to the region and further promote the possibilities of decentralized finance, with simple loan processes featuring full fee transparency.