Dukascopy offers crypto-backed fiat loans to traders
Switzerland’s forex bank and broker, Dukascopy has rolled out a novel lending product that allows customers to leverage their cryptocurrency holdings. The automated feature enables users to borrow up to 50% of the value of their digital assets in fiat currency while still retaining ownership of their original crypto investments.
Dukascopy Bank, headquartered in Geneva, is now offering clients the option to secure a cash loan in U.S. dollars while keeping their cryptocurrency investments intact. Under the bank’s new lending program, clients can access a loan for up to half of the value of their cryptocurrency assets in fiat currency.
The lending program requires users to have a multi-currency bank account with the broker, which acts as a central hub for crypto lending. To make use of this feature, customers need to open a multi-currency bank account (MCA) and transfer the cryptocurrency they want to utilize. They can then access their digital assets in the “Investments” section and choose the “Crypto lending/borrowing” option.
Upon signing a “Trading Agreement,” users will also receive login credentials for a trading sub-account, in which they will find an additional 50% of the investment market value of their crypto holdings in fiat currency as collateral, alongside their crypto investment as an open position.
This means that if a user transfers 0.1 bitcoin (BTC) to their MCA account, they would receive an equivalent of $1,405 (at the time of writing) in their bank account and an equal amount in fiat on their trading account. All these operations are automated, and the Swiss financial institution noted that a 1% commission applies to the incoming cryptocurrency transfer.
Dukascopy’s introduction of this lending service comes amid challenging times for the cryptocurrency industry and the crypto lending sector in particular. Both are facing increased regulatory pressures and high-profile bankruptcies such as those of Celsius and Voyager.
Dukascopy Bank has developed rich crypto-fiat functionality over the last several years together with its retail banking activities. More than 6.1 million Dukascoins were issued by the end of the year 2022. However, the broker’s cryptocurrency business was a major focus for clone scams as the pandemic has made people more susceptible due to concerns about personal finances. The company has been taking steps towards strengthening its cryptocurrency offering, including allowing clients to deposit and withdraw funds in digital coins, as well as enabling free internal crypto transfers between users of mobile banking.
A total of 1160 instruments, including FX, Bullion, CFDs on commodities, bonds, Indices, cryptos, stocks, ETFs are presently available on the bank’s proprietary trading platform JForex.