BlockStream Corporation Unveils Billion-Dollar Crypto Funds as Lending Market Rebounds

Key Points:

• BlockStream Corporation is launching three new funds on April 1, including two focused on crypto-backed lending.
• The crypto lending market is recovering, with Coinbase relaunching Bitcoin-backed loans and expectations of a more favorable U.S. regulatory environment.

Bitcoin technology firm BlockStream Corporation has secured a multibillion-dollar investment to launch three new funds, including two focused on crypto lending, according to Bloomberg.

The move signals a revival of interest in crypto-backed lending, a practice that faced setbacks following the collapse of FTX in late 2022.

Blockstream Corporation Launches Three New Crypto Funds Amid Market Revival

The three funds are scheduled to launch on April 1, with two designed specifically for lending. Blockstream plans to start accepting additional external capital from July 1.

The company previously announced plans for the Blockstream Income Fund, which will underwrite Bitcoin-backed loans, and the Blockstream Alpha Fund, enabling crypto borrowing with U.S. dollars as collateral. The third offering, the Blockstream Yield Fund, will employ hedge fund strategies.

BlockStream Corporation, co-founded by CEO Adam Back, is headquartered in Victoria, British Columbia, with operations worldwide.

The Bitcoin advocate previously openly criticized Trump’s proposed crypto reserve strategy, arguing that it could centralize Bitcoin in a way that contradicts its decentralized ethos.

Blockstream Corporation focuses on blockchain technology solutions that enhance Bitcoin’s storage and transfer capabilities. The company has raised $621 million from investors such as Horizons Ventures, AXA Strategic Ventures, and Fulgur Ventures, according to Crypto-Fundraising.

The broader crypto lending industry has faced significant challenges, particularly after the FTX collapse, which contributed to the downfall of major lenders like Genesis Global Capital and BlockFi.

Crypto Lending Sector Sees Renewed Interest After Past Setbacks

Despite past setbacks, the crypto lending market is showing signs of recovery. In January, Coinbase reintroduced crypto-backed loans, allowing U.S. customers to borrow against their Bitcoin holdings.

The service, unavailable in New York, leverages the DeFi protocol Morpho to facilitate lending. Borrowers can secure loans in USDC without directly engaging with DeFi platforms, as Coinbase manages the process.

The changing political landscape in the U.S. may also offer some relief. Former President Donald Trump’s pro-crypto stance has raised expectations of a friendlier regulatory environment.

The Securities and Exchange Commission has recently scaled back legal actions against crypto firms, including Coinbase, Robinhood, Gemini, Uniswap Labs, Kraken and Consensys.