• Other participants in the round include ​​Golden Tree Asset Management, Raptor Group and FJ Labs
  • The planned Bitcoin-backed mortgage product, will be the first product of its kind on the market

Bitcoin is primarily known as a store-of-value asset, sometimes called digital gold, but Ledn, a global digital asset savings and credit platform based in Toronto, Canada, wants to enable holders to put their bitcoin to productive use by backing real estate mortgages.

Ledn announced the completion of a $70 million Series B funding round on Wednesday. The capital raised during the round will support the launch of its bitcoin-backed mortgage product in early 2022.

Led by Dan Tapiero’s 10T Holdings, this round brings the company’s valuation to $540 million. In addition, Tapiero is joining the company’s board of directors.

The round also included new investors Golden Tree Asset Management, Raptor Group and FJ Labs, and all of Ledn’s existing VC partners participated.

Ledn’s bitcoin-backed mortgage product will be available to clients in the US and Canada and the company aims to originate $100 million in mortgage loans by the end of the first quarter of 2022. The concept is that clients will be able to use their BTC holdings to purchase a property — or refinance an existing one — without having to sell in order to benefit from the price appreciation of bitcoin and real estate.

The product is aimed at clients “who choose to invest outside the mainstream of legacy banks,” co-founder and CEO Adam Reeds said in a statement.

“Our clients want to diversify their portfolio in order to protect their wealth and then utilize that wealth for instances such as purchasing a home, but one should not come at the expense of the other,” he said.

Dealing with volatility

Although bitcoin has appreciated significantly over its 12-year existence, it’s prone to bouts of volatility, both up and down. Bitcoin is down about 30% in the past month, for instance. That can make it risky as collateral.

However, in Ledn’s case, BTC and the real estate serve as collateral for the mortgage, with the loan equal to 50% of the combined value of both assets, which accounts for the intrinsic volatility of the number one digital asset, according to Reeds.

“Combining bitcoin and real estate as joint collateral creates a much more stable mix that allows a more generous time window when a client needs to service his or her loan. Under this format, we can provide weeks to provide additional collateral before having to take action,” he said.

Unlike traditional mortgage loans, borrowers can expect to pay a higher rate of interest when using BTC as collateral. The company plans to offer fixed interest rates that fall between that of traditional mortgages and current bitcoin-backed loan rates of 9.5% for now, Reeds noted, adding, “We anticipate rates to decrease as institutions come in and get more comfortable with Bitcoin collateral.”

Monthly interest payments will be denominated in dollars, but the company will give clients the option to make payments in the USDC stablecoin as well.

Rather than a traditional mortgage of 10, 20 or 30 years, Ledn will reassess the value of a given property every two years and issue a new loan as warranted.

Ledn’s primary business is BTC and USDC savings and loans. Savings accounts are available in about 150 counties and all but nine US states. The company website says clients can “get a loan equal to your Bitcoin holdings, without selling a satoshi.” Currently, the company has a waiting list for the bitcoin-backed mortgages.

Dan Tapiero, managing partner and CEO at 10T Holdings, calls Ledn’s business model “a true win-win for investors and borrowers alike as it gives investors the ability to earn strong returns on their digital asset investments while providing great interest rates to borrowers.”

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  • Macauley was an editor and content creator in the professional chess world for 14 years, prior to joining Blockworks. At Bucerius Law School (Master in Law and Business, 2020) he researched stablecoins, decentralized finance and central bank digital currencies. He also holds an MA in Film Studies; film credits include Associate Producer of the 2016 Netflix feature documentary, "Magnus" about World Chess Champion Magnus Carlsen. He is based in Germany. Contact Macauley via email at [email protected] or on Twitter @yeluacaM