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 property, and mining equipment as collateral—expanding Galaxy's lending capabilities beyond its existing balance sheet operations.
- • Galaxy Digital, founded by former Goldman Sachs partner Michael Novogratz, is capitalizing on surging borrower demand that has outpaced its current lending capacity through its balance sheet.
- • The firm has prior experience in crypto lending through both direct lending and venture investments, including a US$52.5 million fundraising lead for BlockFi in 2018, signaling institutional confidence in the sector.
- • The credit fund will operate under Galaxy Digital's asset management arm, formalizing what was previously an ad-hoc lending operation into a dedicated institutional product.
Summary
Galaxy Digital, the cryptocurrency bank founded by Michael Novogratz, a former Goldman Sachs managing director, is establishing a dedicated credit fund targeting a minimum raise of US$250 million to provide US dollar-denominated loans to cryptocurrency companies. According to people familiar with the matter, Galaxy plans to close its first fundraising round in March 2019, with the fund to be operated through the firm's asset management division.
The fund represents a strategic response to capacity constraints within Galaxy's existing lending operations. While Galaxy Digital has already been offering loans to cryptocurrency businesses using its own balance sheet, demand from borrowers has grown substantially enough to warrant a separate institutional vehicle. The credit fund will accept a diverse range of collateral, including cryptocurrency assets, real property holdings, and mining equipment—reflecting the unique asset base of the borrower pool.
Galaxy Digital's move into formalized crypto lending builds on existing momentum in the space. The firm previously led a US$52.5 million fundraising round for BlockFi, a New York-based cryptocurrency lending start-up, in 2018, demonstrating conviction in the emerging credit infrastructure category. Galaxy Digital Ventures, the firm's investment arm, has also backed other cryptocurrency lending start-ups, positioning the parent company as a central participant in the institutional development of digital asset financing.
The timing of the fund's launch reflects broader institutional recognition of cryptocurrency lending as a viable financial service. By establishing a dedicated fund rather than relying solely on balance sheet capacity, Galaxy is signaling that crypto lending demand has achieved sufficient scale and sustainability to justify third-party capital structures. A spokeswoman for Galaxy declined to comment on specific fund details.
The fund represents a strategic response to capacity constraints within Galaxy's existing lending operations. While Galaxy Digital has already been offering loans to cryptocurrency businesses using its own balance sheet, demand from borrowers has grown substantially enough to warrant a separate institutional vehicle. The credit fund will accept a diverse range of collateral, including cryptocurrency assets, real property holdings, and mining equipment—reflecting the unique asset base of the borrower pool.
Galaxy Digital's move into formalized crypto lending builds on existing momentum in the space. The firm previously led a US$52.5 million fundraising round for BlockFi, a New York-based cryptocurrency lending start-up, in 2018, demonstrating conviction in the emerging credit infrastructure category. Galaxy Digital Ventures, the firm's investment arm, has also backed other cryptocurrency lending start-ups, positioning the parent company as a central participant in the institutional development of digital asset financing.
The timing of the fund's launch reflects broader institutional recognition of cryptocurrency lending as a viable financial service. By establishing a dedicated fund rather than relying solely on balance sheet capacity, Galaxy is signaling that crypto lending demand has achieved sufficient scale and sustainability to justify third-party capital structures. A spokeswoman for Galaxy declined to comment on specific fund details.
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