GalaxyOne is expanding its retail financial platform with a new crypto portfolio line of credit that allows eligible customers to borrow cash against Bitcoin, Ethereum, and Solana.
The new product is designed for investors who need access to cash but do not want to sell their cryptocurrency holdings.
Unlike loans that use a single cryptocurrency as collateral, the new credit line allows customers to combine multiple eligible crypto assets under one borrowing facility. This gives investors greater flexibility in managing their portfolios while using their digital assets to access liquidity.
GalaxyOne Managing Director Zac Prince explained the purpose of the product in an interview with TheStreet Roundtable’s Alp Gasimov. “What this product enables folks to do is borrow cash using their spot crypto holdings as collateral,” Prince said.
Customers can initially borrow up to 50% of the value of their eligible crypto collateral. Variable annual percentage rates start at 8.99%, while loans through the retail product can reach as much as $2 million. For example, an investor holding $100,000 in eligible crypto could potentially borrow up to $50,000.
More Flexibility, But Borrowers Face Liquidation Risk
The credit line gives investors another way to access funds while remaining exposed to their crypto investments. GalaxyOne also plans to support features that allow customers to continue earning staking rewards on Solana while it is being used as collateral. Support for staked Ethereum is expected to be added later.
However, borrowing against cryptocurrencies comes with significant market risk because digital assets can experience sharp price movements. If the value of the collateral falls substantially, a borrower’s loan-to-value ratio can rise toward the liquidation threshold.
GalaxyOne may sell collateral when the loan-to-value ratio reaches 75%. Prince advised customers to avoid borrowing the maximum amount available and instead maintain a more conservative borrowing position.
“The best thing folks can do is be conservative with their borrowing,” Prince said.
The company also says it has built safeguards designed to reduce the risk of liquidations caused by brief market disruptions or price movements limited to a single trading venue.
GalaxyOne Targets Risks Seen in Defi Lending
GalaxyOne is also positioning the credit line as an alternative to borrowing through decentralized finance, or DeFi. While DeFi platforms provide blockchain-based financial services, Prince highlighted concerns around hacks, liquidity problems and changing borrowing costs that have affected some protocols.
One of GalaxyOne’s key differences is its approach to customer collateral. The company says it will not rehypothecate assets pledged by customers, meaning the collateral will not be lent out again.
“I think that’s the biggest point. Collateral is not rehypothecated,” Prince said. “They’re not relent, they’re just sitting in secure custody with us.”
GalaxyOne plans to expand its borrowing services beyond crypto as it develops a larger financial platform. Future products could allow customers to borrow against other assets, including holdings in their brokerage accounts.
