Author: Sonali Basak, Bloomberg
Translation: Luffy, Foresight News
Billionaire Michael Novogratz's Galaxy Digital Holdings LP is expanding its lending business to a new clientele. The latest deal is a loan of several million dollars, with a violin that once belonged to the Russian Empress Catherine the Great as collateral.
According to Yat Siu, co-founder of Galaxy and Animoca Brands, Galaxy lent the funds to Siu, who acquired the 1708 Stradivarius violin for over $9 million at an auction last year.
Galaxy will hold the tokenized version of the instrument in the form of non-fungible tokens, as well as the violin itself. Galaxy and Siu declined to comment on the specific terms or amount of the loan, only revealing that the loan amount is "in the millions of dollars." The violin will be held by a custodian in Hong Kong, and an agreement signed by both parties is required for its removal.
Galaxy Digital tokenizes a 316-year-old violin
Tokenization refers to the process of representing traditional assets such as stocks, bonds, and art on the blockchain using tokens.
Galaxy Digital has provided the loan through its trading and investment banking division, Galaxy Global Markets. The violin loan represents the company's initial efforts to attract a different clientele benefiting from the rise in cryptocurrency prices and the resulting wealth growth.
According to Galaxy's financial statements, as of March 31, the company's average book loan size for the first quarter was $664 million, a 5% increase from three months prior.
Due to the volatility of asset prices, loans linked to crypto assets typically require a large amount of collateral. Thomas Cowan, Vice President of Tokenization Business at Galaxy, stated that as the issuance of physical assets represented on the blockchain begins, this situation may improve.
The next step is real estate?
Cowan stated in an interview that tokenizing physical assets such as art or instruments "allows us to offer more loans to clients than assets with greater volatility such as Bitcoin or Ethereum. Today it's a violin, tomorrow it could be real estate."
Siu mentioned that he may use the loan proceeds to invest in new cryptocurrency-related projects or art.
"I'm thinking, how can we create something special that more people can use," Siu said regarding the tokenization process. As for the violin collateral loan, he added, "It's also a good way to gain additional liquidity, although it's not necessary."
Galaxy collaborated with Siu through its subsidiary GK8 to tokenize the violin.
Siu expressed his ultimate hope to allow others to purchase ownership of the tokenized violin through "fractionalization," but added that there are currently no plans to do so.
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