Key Takeaways
- • Galaxy Digital is raising a minimum of US$250 million for a dedicated credit fund to provide US dollar loans to cryptocurrency companies, with the first fundraising round expected to close in March 2019.
- • The fund will accept cryptocurrency assets, real estate holdings, and cryptocurrency mining equipment as collateral, representing a structured approach to crypto lending backed by tangible and digital assets.
- • Galaxy Digital, founded by former Goldman Sachs partner Michael Novogratz, is expanding beyond its existing balance sheet lending operations due to surging demand from borrowers in the cryptocurrency sector.
- • The credit fund will be operated through Galaxy Digital's asset management division, leveraging the firm's existing expertise in cryptocurrency lending and its track record of backing crypto-focused ventures.
- • Galaxy Digital previously led a US$52.5 million fundraise for BlockFi, a New York-based cryptocurrency lending start-up, demonstrating the firm's established position in the crypto lending ecosystem.
Summary
Galaxy Digital, the cryptocurrency-focused bank founded by Michael Novogratz, a former Goldman Sachs partner, is establishing a dedicated credit fund with a minimum capitalization of US$250 million to extend loans to cryptocurrency companies. The fundraising initiative reflects accelerating demand for credit products within the digital asset sector and represents a strategic pivot toward third-party capital management rather than relying exclusively on the firm's own balance sheet for lending operations.
The proposed fund will operate under Galaxy Digital's asset management arm and will accept diverse collateral arrangements including cryptocurrency holdings, physical properties, and cryptocurrency mining equipment. This multi-asset collateral approach addresses the unique capital structure and operational needs of borrowers in the crypto sector, where traditional lending collateral may be unavailable or insufficient. The bank plans to close its initial fundraising round in March 2019, positioning the fund for rapid deployment into the market.
Galaxy Digital has demonstrated considerable traction in cryptocurrency lending prior to this fund launch. The firm currently extends loans to cryptocurrency businesses using its own capital reserves and has actively participated in venture financing through Galaxy Digital Ventures. Most notably, the company led a US$52.5 million funding round for BlockFi, a New York-based cryptocurrency lending platform, establishing its credibility and market knowledge in the sector. The decision to raise third-party capital signals that internal lending capacity has become constrained relative to market demand, compelling Galaxy Digital to establish a dedicated vehicle to capture growth opportunities in crypto credit.
A Galaxy Digital spokeswoman declined to provide further commentary on the fund's structure or investor base at the time of reporting, indicating the company's preference to formalize details through the closing process rather than advance public disclosure during the fundraising phase.
The proposed fund will operate under Galaxy Digital's asset management arm and will accept diverse collateral arrangements including cryptocurrency holdings, physical properties, and cryptocurrency mining equipment. This multi-asset collateral approach addresses the unique capital structure and operational needs of borrowers in the crypto sector, where traditional lending collateral may be unavailable or insufficient. The bank plans to close its initial fundraising round in March 2019, positioning the fund for rapid deployment into the market.
Galaxy Digital has demonstrated considerable traction in cryptocurrency lending prior to this fund launch. The firm currently extends loans to cryptocurrency businesses using its own capital reserves and has actively participated in venture financing through Galaxy Digital Ventures. Most notably, the company led a US$52.5 million funding round for BlockFi, a New York-based cryptocurrency lending platform, establishing its credibility and market knowledge in the sector. The decision to raise third-party capital signals that internal lending capacity has become constrained relative to market demand, compelling Galaxy Digital to establish a dedicated vehicle to capture growth opportunities in crypto credit.
A Galaxy Digital spokeswoman declined to provide further commentary on the fund's structure or investor base at the time of reporting, indicating the company's preference to formalize details through the closing process rather than advance public disclosure during the fundraising phase.
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