Ledn Shifts to Full Custody Model for Bitcoin Loans, Drops Ethereum Support

Ledn, a prominent digital asset lender, has announced a significant shift in its operational strategy, transitioning to a full custody model for Bitcoin loans and discontinuing support for Ethereum. This move is designed to consolidate its Bitcoin-focused business and further safeguard client assets against credit risks.

Under the new full custody structure, Ledn will no longer lend out client assets to generate interest. Instead, Bitcoin collateral will remain under full custody by Ledn or one of its designated funding partners. This means that assets will not be rehypothecated, reused, or loaned out to generate yield, as stated by Ledn co-founder and CEO Adam Reeds.

Reeds explained that this shift brings the company back to its roots and aligns more closely with Bitcoin’s founding principles. Bitcoin was created as a direct response to the risks of fractional reserve banking and unchecked use of client assets to generate interest. Traditional finance relies on constantly reusing client assets to create leverage and, ultimately, inflation. Bitcoiners instinctively reject that model, which is why Ledn has moved away from this approach entirely.

The decision to end support for Ether (ETH) is part of a broader strategic shift, as Bitcoin represents over 99% of Ledn’s client activity. Rather than fragmenting the platform to chase marginal volume, Ledn is going all-in on Bitcoin and simplifying its stack to reflect what its clients actually value.

Founded in 2018, Ledn has emerged as one of the largest lenders in the digital asset space. The company enables Bitcoin holders to borrow against their assets, giving them access to liquidity without having to sell their holdings or trigger a taxable event. This approach is commonly used by wealthy investors, who take out low-interest loans against stocks, real estate, and other assets to access cash.

Ledn's transition to a full custody model for Bitcoin loans is a strategic move that reflects the company's commitment to providing a secure and reliable lending platform. By holding client assets in custody, Ledn can offer greater assurance to its users, ensuring that their investments are protected against potential risks. This approach is particularly relevant in the current market environment, where regulatory uncertainties and market volatility pose significant challenges to the cryptocurrency industry.

The shift to a full custody model not only enhances the security of client assets but also aligns with regulatory requirements, making it a more sustainable approach in the long run. This transition underscores Ledn's commitment to offering a reliable and secure lending service, positioning it as a leader in the evolving cryptocurrency lending industry.