According to Bloomberg, Galaxy Digital, a leading cryptocurrency firm, is venturing into a new form of lending by tokenizing traditional assets. The company recently lent funds to a billionaire, with the loan collateralized by a tokenized violin. This move represents an effort to cater to a different clientele, particularly those benefiting from the surge in cryptocurrency prices and the consequent increase in wealth.
Galaxy Digital already provides loans through its trading and investment banking division, Galaxy Global Markets. However, the tokenization of physical assets such as fine art or musical instruments could potentially allow the company to lend more to its clients than against volatile assets like Bitcoin or Ethereum, according to Thomas Cowan, Galaxy's vice president of tokenization. He stated, 'Today it's a violin, but tomorrow it could be real estate.'
The borrower, who chose to remain anonymous, mentioned that he might use the loan proceeds to invest in new crypto-related projects or art. He also expressed interest in the tokenization process, stating it was a good way to gain additional liquidity, even though it wasn't required. The tokenization of the violin was carried out through a subsidiary, GK8. The borrower also expressed a desire to eventually allow others to buy a claim on the tokenized violin through a process known as fractionalization, although there are currently no plans or agreements to do so.