The digital asset trading group and crypto lender Genesis has begun accepting non-fungible tokens (NFTs) as collateral for loans and derivative deals.
NFTs, verifiable digital assets that can be stored and traded on blockchains such as Ethereum and Solana, were all the rage in 2021 and continue to make headlines in 2022.
The move by Genesis is another sign that digital assets are expanding their utility as they enter the market of more complex crypto-financial products.
The head of derivatives trading at Genesis said, “NFTs come up in almost every conversation.” It looks like Genesis has come to a consensus about how to implement them.
Last year, the NFT market reported over $25 billion of total sales volume and by some estimates, it was even higher. The success has sparked a new wave of brands, corporations and celebrities to enter the nascent industry. Each day they are making headlines by buying into NFT projects, applying for NFT-related trademarks or releasing their own NFT collections.
Furthermore, individual NFTs from popular projects like the Bored Ape Yacht Club are selling for millions of dollars, and the momentum behind NFTs doesn’t seem to be slowing down anytime soon.
Genesis will allow holders of valuable NFTs to use them as collateral, similar to the way government bonds and other assets can be used as collateral to back a transaction or loan.
Of course, the company is well aware of the difference between government bonds and NFTs. The latter is still a new and volatile asset class, which is why Genesis will be taking a “very conservative approach” and will only accept “premium” NFTs as collateral.
In 2021, Genesis underwrote $131 billion in crypto loans and handled $170 billion in cash and derivative transactions, making it the biggest professional investor crypto trading desk.
Though the company didn’t mention specifically what Blue Chip NFTs they’ll accept, we imagine if you’re holding a CryptoPunk or Bored Ape you won’t have any problem. Of course, there are a ton of NFTs with value that could be considered as well.