- Wall Street’s trading powerhouse Jane Street, famed for its domination in markets such as ETFs and corporate bonds, is turning to decentralized finance to borrow cryptocurrency, reported Bloomberg.
- Jane Street plans to borrow up to $25 million in USDC, a stablecoin pegged to the US dollar, to expand to $50 million. It will borrow from the crypto business BlockTower Capital via Clearpool, a DeFi marketplace where institutions can obtain uncollateralized liquidity from a network of lenders.
- Clearpool is backed by worldwide investors such as Sequoia Capital and Arrington Capital.
- This is the first time Jane Street is using decentralized finance to borrow crypto, a representative confirmed.
- “This is the first traditional financial institution on Wall Street that has made this step -- this almost opens the floodgates,” Robert Alcorn, chief executive officer of Clearpool, said in an interview. “Others are going to go from watching this space to considering it seriously.”
- Crypto-focused firms such as Alameda Research already use similar services like Maple Finance and TrueFi to borrow or lend capital. Unlike most other DeFi marketplaces, these platforms allow customers to abide by know-your-customer and anti-money-laundering standards. These services may also enable users to borrow at a lower interest rate.
- Lenders in such DeFi protocols typically earn 15% to 25% in annualized interest, Sanat Rao, a general partner at BlockTower Capital. He declined to cite the rate BlockTower will receive.
