In today’s volatile crypto market, long-term holders face a critical challenge: how to access liquidity without selling their assets. Bitcoin-backed loans are emerging as the solution.
According to data from Galaxy Research, Ledn has grown into the third-largest centralized finance (CeFi) lending institution, trailing only Tether and Galaxy. Together, these three companies account for nearly 89% of the CeFi lending market.
Meanwhile, Tether is quietly reshaping the crypto finance landscape through a series of strategic investments.
01 Market Trends: Industry Giants Move into Crypto-Backed Lending
The crypto-backed lending market is undergoing a silent revolution. Galaxy Digital’s research shows that CeFi lenders saw 9.24% growth in the first quarter of 2025, reaching $13.51 billion.
In this sector, Tether leads with $8.83 billion in loan volume, while Ledn follows with $932.5 million.
In the third quarter alone, Ledn issued $392 million in Bitcoin-backed loans, pushing its year-to-date lending total past the $1 billion mark.
This strong performance has enabled Ledn to grant over $2.8 billion in loans across more than 100 countries since its founding.
Even more notably, Ledn reports generating approximately $100 million in annual recurring revenue, highlighting both the sustainability and robust profitability of its business model.
02 Strategic Value: Tether’s Investment Logic
Tether’s latest strategic investment is not an isolated move—it’s a key step in expanding its influence in the crypto finance market.
Recently, Versamet Royalties Corporation announced Tether Investments as its new cornerstone shareholder, with Tether acquiring 11,827,273 common shares, representing about 12.7% of the company’s outstanding shares.
This investment aligns with Tether’s broader strategy in crypto finance. As the dominant stablecoin issuer, Tether continually seeks to expand its footprint within the crypto ecosystem.
By investing in specialized Bitcoin-backed lenders like Ledn, Tether is deepening its reach into the crypto lending market, which is projected to grow to $45 billion by 2030.
Through its investment in Ledn, Tether not only stands to gain financial returns but also strengthens its influence over crypto financial infrastructure, laying a foundation for future stablecoin use cases.
03 Industry Trends: Surging Demand for Bitcoin-Backed Loans
In the current bull market, demand for Bitcoin-backed loans is skyrocketing. Bitcoin’s price has soared above $100,000, creating new wealth effects for long-term holders.
Many now prefer to use Bitcoin as collateral for loans rather than selling and incurring capital gains tax.
Ledn’s fully collateralized loan products hold Bitcoin collateral with custodians throughout the loan period, validated by independent third-party proof-of-reserves certification—a model that has been well received by the market.
Notably, Ledn discontinued its Ethereum lending business earlier this year to focus exclusively on Bitcoin custody and lending—a strategic shift that appears to be paying off.
Institutional interest is accelerating as well. Cantor Fitzgerald, Maple Finance, and FalconX recently completed their first Bitcoin-backed loan transaction, underscoring Wall Street’s growing involvement in crypto credit markets.
04 Traditional Financial Institutions Enter the Arena
The potential of crypto-backed lending is also attracting traditional financial institutions. Reports indicate that JPMorgan Chase is preparing to allow institutional clients to use Bitcoin and Ethereum as collateral for cash loans.
This means borrowers can pledge these two largest cryptocurrencies by market cap, with assets held by approved third-party custodians such as Coinbase. The program is expected to launch by the end of 2025.
Ironically, JPMorgan CEO Jamie Dimon is a well-known crypto skeptic, having previously called Bitcoin a "fraud."
Yet the growing demand in this emerging sector has compelled him to support the company’s entry into crypto-related products.
JPMorgan’s involvement is institutionalizing the crypto collateralized lending model, signaling that digital assets have matured enough to meet global financial standards for compliance, custody, and risk management.
05 Market Challenges and Opportunities
Despite its promising outlook, the crypto-backed lending market faces significant challenges. The inherent volatility of cryptocurrencies, regulatory uncertainty around capital treatment, and persistent counterparty risks all limit the expansion of crypto collateralized lending.
US regulators have yet to issue clear capital weighting guidelines for digital collateral, forcing institutions to rely on conservative internal models.
Even with third-party custodians managing collateral risk, regulatory oversight is expected to remain stringent.
Nonetheless, the industry’s trajectory is clear. Crypto researcher Shanaka Anslem Perera estimates that JPMorgan’s model could unlock $10–20 billion in instant lending capacity for hedge funds, corporate treasuries, and large asset managers.
These institutions seek dollar liquidity without having to sell their crypto tokens.
06 Ledn’s Specialization Strategy and Market Positioning
Amid fierce competition, Ledn has chosen a path of specialization. Earlier this year, the company exited Ethereum lending to focus exclusively on Bitcoin custody and lending.
Ledn offers fully collateralized loans, with Bitcoin collateral held by custodians throughout the loan term.
Its reserves are verified through independent third-party proof-of-reserves certification, enhancing transparency and user trust.
As of the end of September 2025, Ledn’s loan book stood at $836.2 million, with an average loan-to-value (LTV) ratio of 42.7%, and it published a reserve attestation from The Network Firm.
This conservative LTV ratio reflects Ledn’s cautious approach to risk management, providing a buffer against Bitcoin price volatility.
In the context of recent market corrections, such prudent risk management is especially valuable.
07 Outlook: The Evolution of Crypto-Backed Lending
With more institutional players entering the space, the crypto-backed lending market is poised for faster innovation and growth. A "competitive chain reaction" among major banks has already begun.
Competitors like Citigroup and Goldman Sachs are expanding their digital asset custody and repo businesses; BlackRock has integrated tokenized Treasuries into its fund ecosystem; Fidelity has doubled its institutional crypto division headcount this year.
Matt Sheffield, CIO of Ethereum-focused finance firm SharpLink, believes these developments could reshape how asset managers and funds handle their balance sheets.
"By borrowing against positions held with third-party custodians, institutions can build more profitable portfolios and boost the value of their collateral assets."
Bitcoin analyst Joe Consoerti notes, "The global financial system is slowly reconfiguring collateral around the highest-quality asset known to humanity."
Looking Ahead
Bitcoin-backed lending is moving from the fringes to the center stage. With strategic investments from giants like Tether and the entry of traditional financial institutions such as JPMorgan, the market is undergoing rapid institutionalization and specialization.
According to Canadian law firm Osler, Hoskin & Harcourt LLP, the Bitcoin-backed lending market could grow from roughly $850 million today to $4.5 billion by 2030.
This clear growth trajectory signals that digital assets are steadily integrating into the architecture of the global credit market.
