Bitcoin in bridging

Could bitcoin be used in bridging?

Following the recent buzz around bitcoin, B&C has asked a number of lenders whether they could envisage the cryptocurrency being used within the bridging finance market in the future.

One single bitcoin is currently worth $14,638 (approximately £10,803) at the time of writing (2.37pm on 04.01.2018)  and last month reached its highest-ever value.

Could we see bitcoin introduced to the bridging market?

Michael Dean, principal of Avamore Capital, believed that the price shifts were “too volatile” for this to be viable.

Allegra Penny, relationships manager at Funding 365, said: “The price fluctuations make it impossible to use for bridging transactions.

“The cryptocurrency is also extremely difficult to regulate as there is no way of tracing where funds originate from – this would pose a big issue from a money laundering perspective.

“Lastly, bitcoin’s enormous transaction fees would prove very expensive if it [was] to be used in bridging and would discourage lenders and borrowers alike from using the currency for deals.

“Bitcoin’s recent fame has come from an incredible growth in price, but it is also known to lose value just as fast.”

Paresh Raja, CEO of Market Financial Solutions, added: “Bitcoins are a new asset class with a huge potential to grow as an investor.

“However, lending on bitcoins is currently not fully governed, therefore, a regulatory risk.

“[It is] still under development with valuations fluctuating significantly, hence a lot of due diligence and understanding needs to be done before we can use it in the bridging market.

“[That’s] not to say that in the future we cannot consider it, as any changes and movements in bitcoins are made straight away and disclosed to the parties involved.

“With further regulation and understanding – especially how to recover the money and protect the investor as well as the borrower – it could have potential uses in bridging.”


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