Spending your cryptocurrencies is one of the goals of many companies. Startups around the world think of innovative solutions on how to allow investors to actually spend their digital coins.
One financial startup, however, is doing a different thing. Nexo, Arrington XRP capital-backed company, revealed a special debit crypto card with a line of credit that is backed up by the user’s actual cryptocurrency assets.
According to a news report from Coin Desk, Nexo has partnered with another company to issue the card. Nexo’s partner, Mr. Antoni Trenchev, said that the card allows users to spend the value of their digital coins without actually spending them in real.
How the company does this is by using the user’s crypto holdings as a collateral, and at the same time giving users a fiat loan of the equivalent amount as the cryptocurrency value.
According to press, Nexo has already issued around $700 million in such collateralized loans for over 200k clients. The trick here is that these fiat loans can be accepted with a vendor who accepts MasterCard.
All cards are issued without the need for checking the credit history of the user, as the collateral is their cryptocurrency “wealth”. Interest rates for the loans are between 8% and 24% APR, depending on the regulatory framework and the structure of the loan.
An interesting component to the project is that clients can repay their loans by paying in fiat money or in cryptocurrencies, and if they use Nexo’s token to do that, the interest rate on the loan may be reduced to the minimum possible amount of 8%.
In addition, as Coin Desk reported, the minimum payments that need to be made are eliminated once the value of bitcoin goes up. In a sense, the line of credit is dynamic, as the value of the user’s collateral (his or her crypto holdings) increases, the debt goes down.
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Spending the value of your crypto without spending the actual coin – by Nexo was first posted on August 2, 2019 at 11:31 pm.