Ledn, one of many world’s largest bitcoin lenders, introduced its Open Ebook Report, a reserves transparency benchmark designed to reveal the form of threat that brought about the 2022 FTX-driven crypto crash.
In keeping with a press launch shared with Bitcoin Journal, “Conventional lenders (together with Citi, JPMorgan, Wells Fargo, BNY Mellon, Schwab, and Financial institution of America) are reportedly coming into the area amid a regulatory vacuum by way of rehypothecation practices and proof of reserves.” With the passing of the GENIUS Act, which greenlit treasury-backed stablecoins, Wall Road now has a street to service the crypto market and even improve its personal rails and infrastructure.
However there are nonetheless those that name for clearer regulatory construction for crypto counter events, Ledn factors out that “World guidelines on crypto capital necessities & proof of reserves stay in flux, with the US and UK refusing to implement Basel’s proposed framework,” including that “IOSCO is pushing regulators to carry crypto custody and lending to the requirements of conventional finance, but virtually no establishment has disclosed how bitcoin collateral is managed, whether or not it’s rehypothecated, or what occurs in a liquidation situation.”
John Glover, Chief Funding Officer at Ledn and former Managing Director at Barclays, defined that “If lenders would not have to reveal how they use shopper collateral, the shoppers turn out to be the leverage. We noticed what occurred when BlockFi, Celsius, and Voyager operated in the dead of night. The distinction now could be that the stability sheets are larger.” He warned that “That is how we get a 2022-style lending disaster at institutional scale.”
Ledn’s Open Ebook Report, launched immediately, showcases “the trade’s longest-running Proof of Reserves,” in response to the press launch. The report exposes Ledn’s BTC mortgage e book, collateral ranges, and combination loan-to-value ratios. In keeping with the report, the Community Agency LLP, a U.S.-based licensed public accounting agency, independently audited & confirmed that 100% of collateral is held in custody.
The report additionally reveals “$868 million in excellent BTC-backed loans, with 18,488 BTC in collateral posted, held 100% BTC in custody; all BTC collateral is held in on-chain addresses and/or custodial accounts.” Ledn’s common loan-to-value ratio stands at 55%, an combination LTV nicely under trade liquidation thresholds. Since 2018, the corporate has funded “$10.2 billion in lifetime loans throughout 47,000 originations.”
This framework appears to maneuver the trade previous one-off snapshots—beginning with month-to-month disclosures and laying the groundwork for extra steady, real-time transparency over time. In contrast to self-reported pockets addresses, Ledn’s strategy combines month-to-month reporting on mortgage e book metrics—together with excellent loans, collateral posted, and common LTV—with reporting from The Community Agency LLP. Ledn additionally maintains Proof of Reserves attestations on a semiannual foundation (each two quarters), confirming that belongings exceed shopper liabilities, with “Merkle tree methodology” enabling shoppers to substantiate their balances had been included.
Whereas some corporations have introduced “proof of reserves” by publishing pockets addresses, Glover argues this falls quick. “True transparency requires unbiased reporting, common updates, and methodologies anybody can verify,” stated Glover. “Shoppers shouldn’t should take anybody’s phrase for it.”
Ledn not too long ago obtained a strategic funding from Tether and has an impeccable observe file of defending shopper belongings throughout its mortgage originations, surviving the 2022 crypto lender disaster, and at the very least one different bear market earlier than that.
The press launch warns that “as conventional monetary establishments speed up their entry into bitcoin-backed lending, Ledn’s Open Ebook Report establishes the baseline towards which these new entrants must be held, earlier than regulators mandate it.”
