In a recent press release, crypto-backed loan provider Cred announced that it will now be providing USD loans using XRP (Ripple) as collateral. Today, we witnessed an increase in the Ripple price.
The move will now allow XRP holders to extract value from their portfolio, without being required to sell their holdings and potentially miss out on any growth that might occur during their loan period.
Cred highlights that this will allow cryptocurrency users to save on the taxes they might otherwise incur by exiting their positions entirely.
Essentially, the Cred platform works much like traditional lending institutions by using a risk-scoring mechanism to determine whether a user is eligible for a loan. Cred also analyses the creditworthiness of the proposed collateral, ensuring that it meets their criteria to be considered against a loan. Once finalized, a smart-contract based escrow and liquidation system is implemented, ensuring the lender is protected against defaults.
Commenting on the update, Mike Arrington, founder of the hedge fund XRP Capital, announced his approval of the decision, exclaiming that he was impressed by Cred’s ability to bridge the gap between traditional financial services and cryptocurrency. (Despite cryptocurrency being born out of a distrust for traditional financial institutions.)
Cred has over $300 million in credit facilities available — currently more than all of its competitors combined. This success has helped it form several significant partnerships in the past, including one with Uphold, one of the largest cloud-based digital money platforms which now offer Cred’s LBA token for sale in over 170 countries.
Leading crypto wallets and crypto exchange platforms are also said to be integrating Cred’s Crypto Line of Credit (C-LOC) platform.
🔔🔔🔔 Hello #XrpCommunity !
As of now 8 exchanges are implemented on #XrpCommunityAPI :
💰Binance
💰Bitbank
💰Bitfinex
💰Bithumb
💰Huobi
💰Kraken
💰Okex
💰ZBFirst version of the #API allowing to track #XRP price over those exchanges in REAL TIME will be released Monday ! ⌚️
— RossMacFirdeen – XRP (@RossMacFirdeen) November 11, 2018
Since the announcement, the market continued to trade relatively sideways, trading between $0.49 and $0.51 until November 15 — which saw it spike more than 4 percent in 10 minutes following the announcement that eight exchanges will be using the new XRP Community API.
Do you think XRP-backed loans will shift a lot of attention back to Ripple? What do you think of crypto-backed loans in general? Are they good or bad for the industry? Let us know your thoughts in the comments below!