Recently, RSM partnered with the Canadian Lenders Association (CLA) to explore the crypto-lending environment in Canada and to discuss how financial institutions (FIs) can embrace this emerging opportunity. However, before embarking on this journey, it is important to understand what crypto-lending means. Crypto-lending comes in two forms:
- A centralized financial (CeFi) product, which is akin to a savings account, with third-party intermediaries (i.e., Coinbase) removing barriers to participation and
- A decentralized financial (DeFi) product, which is a collateralized loan with interest rates that are determined by supply and demand.
How can financial institutions leverage crypto?
Contrary to what some might think, crypto-lending does not compete with traditional lending products. In fact, crypto-lending can streamline a traditional lender’s operations through digitizing the rules of engagement, lowering the cost of capital and allowing for a more inclusive market. FIs that embrace this space as an opportunity will be better positioned to capitalize on crypto’s powerful potential. However, it’s crucial for FIs and traditional lenders to understand how best to take advantage of these emerging markets, where the risks lie and how to prepare for the future of lending.
We encourage you to watch the video recordings below to learn more about these key considerations.