Nexo, a lending institution, has partnered with Fidelity to investigate new products and tri-party loan agreements for institutional investors.
Nexo, a lending startup, has teamed with Fidelity, an institutional custodian, to bring professional bitcoin products to market, according to a statement released Tuesday. Fidelity’s enterprise-grade infrastructure will be used by the lender to enhance institutional access to its prime brokerage platform.
“As a first step, the collaboration with Fidelity Digital Assets will expand Nexo’s ability to service and enhance its growing portfolio of assets under management and will provide an additional custody layer to Nexo’s military-grade security infrastructure,” per the statement.
Nexo claims that the relationship will allow it to test new products for institutional investors, such as tri-party frameworks for bitcoin-backed loans. Wall Street banks are also allegedly looking into emulating tri-party agreements to execute institutional cash loans with bitcoin as security.
The strategy, which is common in traditional finance, employs a third-party agent to verify that cash and underlying assets are delivered to each participant in accordance with the terms of the arrangement.
Fidelity Digital Assets isn’t the first company to explore bitcoin-backed lending. Bloomberg reported in December of last year that the custodian had stepped into the area in partnership with BlockFi. Silvergate became a partner in March, allowing it to expand its bitcoin-backed loans. Nexo is the newest lender to take advantage of Fidelity’s institutional custody and trading platform.
“Working with Fidelity Digital Assets is the latest milestone in our quest to offer a complete institutional platform and to onboard traditional finance companies into the digital asset ecosystem,” Kalin Metodiev, co-founder and managing partner at Nexo, said in the statement. “Our client base will now have full use of our industry-leading credit and trading products with reliance on Fidelity Digital Assets’ bespoke custody and security solutions.”
Nexo claims to have over 2.5 million customers in 200 countries and offers bitcoin-backed loans in more than 40 fiat currencies.