- Helio Lending wants to issue short-term finance — in real money — to Australian customers who put their crypto assets up as collateral.
- The company says it has obtained an ASIC-approved Australian Credit Licence, via the buyout of another lending company.
- Interest rates will be up to 24% with loan terms between 60 days and five years.
- The launch of the platform follows increased volatility on crypto markets, which has seen the value of Bitcoin plunge in recent weeks.
If you’ve been following crypto prices recently, you’d know the market has seen better days. Just today, Bitcoin had slumped further to a new 15-month low of around $US3,400.
But Australian company Helio Lending is unfazed, announcing the launch of a new lending platform that uses crypto assets as collateral.
Helio will take custody of customers’ crypto holdings, in return for loans issued in up to four fiat currencies: Australian dollars, US dollars, Euros or Hong Kong dollars.
Max Geraldes, head of business development at Helio, told Business Insider the applicable crypto assets used as underlying collateral would be limited to Bitcoin, Ethereum, Litecoin and Ripple.
In order to legally lend money, Helio says it has obtained an Australian Credit Licence (ACL #391330) with ASIC, the corporate regulator.
Geraldes said the ACL was obtained via the buyout of another entity, Cashflow Investment, which previously held the licence.
He added that the terms of Helio’s ACL allow it to lend for anywhere up to 25 years. However, initial loan terms will be limited to a minimum of 60 days and a maximum of 5 years.
Business Insider has sought comment from ASIC.
Geraldes explained that Helio will lend funds based on a maximum loan to value (LVR) ratio of 50%.
The minimum loan amount will be $1,000, up to a maximum of $5 million. So with a 50% LVR, someone with crypto holdings of $10,000 could borrow $5,000 in real money.
Borrowers who use the maximum LVR will be charged an interest rate of 24%. Interest rates drop to 20% for a 40% LVR, and 17% for a 30% LVR.
“These rates are slightly higher than our competitors,” Geraldes said.
However, Helio’s product offering is competitive because it “doesn’t include any establishment fees or ongoing monthly account fees”.
According to finder.com.au, the standard interest rates on Australian-issued credit cards range between 12.5% and 20%.
Given the recent volatility in crypto markets, it begs the obvious question — what happens if the price of the underlying crypto holdings fall sharply?
In short, customers could find themselves cleaned out of their crypto holdings.
“We don’t want to liquidate any clients, but if crypto prices fall and the value of the underlying asset reaches 95% of the loan amount then we’ll have to liquidate,” Geraldes said.
So based on the example above, if your $10,000 worth of Bitcoin falls to $5,000 — equal to the value of the 50% LVR loan — Helio will take ownership of your Bitcoin.
What about secure custody of the underlying crypto assets?
Geraldes said as part of its lending arrangements, Helio will take custody of the underlying crypto assets in conjunction with a partner entity in Switzerland called ETHlend.
According to its website, the Swiss-based company also offers a lending platform issuing loans backed by Digital Assets.
A statement from Helio said the company will partner with ETHlend “in the Asia Pacific region to manage the crypto wallets and clearing liquidity”.
The company said that in addition to securing collateral, each loan approval will include Know Your Customer (KYC) checks and the creation of lending agreements.
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