According to Foresight News, Galaxy Digital Holdings LP, founded by billionaire Michael Novogratz, is expanding its loan business to new customer groups. The latest transaction involves a multi-million dollar loan, with a violin once owned by Russian Empress Catherine II as collateral.
Galaxy and Yat Siu, co-founder of Animoca Brands, stated that Galaxy lent the funds to Siu, who purchased the 1708 Stradivarius violin at an auction last year for an estimated $9 million. Galaxy will hold a tokenized version of the instrument in the form of non-fungible tokens (NFTs), as well as the violin itself. Both Galaxy and Siu declined to comment on the specific terms or amount of the loan, only revealing that the loan amount is 'up to several million dollars'. The violin will be held in custody in Hong Kong, and both parties must sign an agreement to remove the violin.
Tokenization refers to the process of representing traditional assets such as stocks, bonds, and artworks with tokens on the blockchain. Galaxy Digital has provided loans through its trading and investment banking division, Galaxy Global Markets. The violin loan represents the company's initial efforts to attract different customer groups benefiting from the rise in cryptocurrency prices and the resulting wealth growth.
According to Galaxy's financial statements, as of March 31, the company's average book loan size for the first quarter was $664 million, a 5% increase from three months ago. Thomas Cowan, Vice President of Galaxy's tokenization business, stated that this situation could improve as physical assets begin to be issued on the blockchain.
In an interview, Cowan stated that tokenizing physical assets such as artworks or musical instruments 'allows us to provide more loans to customers than more volatile assets such as Bitcoin or Ethereum. Today it's a violin, tomorrow it could be real estate.'
Siu stated that he might use the loan proceeds to invest in new cryptocurrency-related projects or artworks. 'I'm thinking about how we can create something special that more people can use,' Siu said of the tokenization process. Regarding the violin collateral loan, he added, 'This is also a good way to get additional liquidity, although it is not necessary.'
Galaxy tokenized the violin in collaboration with its subsidiary GK8 and Siu. Siu stated that he ultimately hopes to allow others to purchase ownership of the tokenized violin through 'splitting', but he added that there are currently no plans to do so.