Secured loans in the digital lending space are witnessing a lot of innovations. But thinking of cryptocurrencies as collateral forms for these loans is still a big question, one full of regulatory and practical concerns.
Also read: Japanese Corporation Begins Offering Loans Secured by Cryptocurrency
Loans Secured Against Bitcoins
If there is anything that has undergone a change, thanks to digital players in the BFSI space in India, it is – everything. Just pick lending and you can see how big data, social media weight, machine learning, etc. have made KYC (Know Your Customer) and credit-checks different. Add to that the use of APIs (Application Program Interfaces) and virtual elements for fast disbursement, and one can see why speed and ease are making digital loans stand apart.
So why not use cryptocurrency instead of gold or property to cushion a secured loan? Truly ‘digitize’ a loan? News.Bitcoin.com surveyed players in the industry, and there responses can be categorized as skeptical.
Abhi Upadhyay, a professional in the mobile lending space, dismisses the hope. “Traditional financial institutions like banks are never going to come close to accept cryptocurrency as security.”
But this ‘traditional’ legacy is exactly where and why challengers have started to win. Digital lenders have compellingly questioned deep-rooted processes and red tape in the lending industry in India by experimenting a lot, such as with the use of social media instead of old-school documentation for KYC and credibility checks. So why not bitcoin?
Regulation, Regulation, Regulation
Manav Jeet, Founder and CEO of Rubique, a prominent fintech player in the digital space, says the use of cryptocurrency as a collateral in the case of secured loans is a long shot. The biggest difference is the amount of
