The LaaS concept isn’t limited to just traditional lending anymore. SALT, a pioneer in crypto-backed lending, announced a Lending-as-a-Service tool that will enable up to 5,000 auto dealerships the ability to offer crypto-collateralized car loans. It’s called Embedded Crypto Lending and made possible through a partnership with Cion Digital.

“We’ve been building our direct-to-consumer lending business with the embedded model in mind from the start,” said SALT’s CEO Justin English. “From crypto native wallets and exchanges to large neobanks and traditional financial institutions, market participants are increasingly intent on digitizing their platforms to accommodate the ever-growing demand for crypto, and we’re excited to help facilitate the transformation.”

Car buyers will be able to user their crypto as collateral for car loans, often at a lower cost than alternatives, while at the same time being able to pay for a car in full with crypto or at least use it to make a down payment.

“With almost half of Millennials now owning crypto, we are working together to increase dealer capabilities for this fast-growing market of buyers who want more financing and payment options at the dealership,” said Fred Brothers, President and Co-founder of Cion Digital.

In California, License no. 60 DBO77905 authorizes Digital Power Lending (DPL) to make commercial loans in the state. Offering everything from merchant cash advances to equipment financing, and more, DPL is one of many companies working to provide capital to small businesses.

But DPL stands out for two reasons. First, the company’s founder and executive chairman, Milton “Todd” Ault III, has more than 100,000 subscribers on his youtube channel. Second, DPL plans to fund up to $100 million in commercial loans secured by Bitcoin, according to a recent announcement. Planning to lend in the individual range of $1 million to $25 million, DPL says that the program “will allow the borrower to repay a loan using various methods including cash, Bitcoin, or, in the case of convertible promissory notes, common stock of the borrower.”

“The Company’s objective is to allocate a total of $250 million in capital to DP Lending, including the $100 million in Bitcoin,” the company states.

Ault explained, “From my many years of financing companies, I know all too well the challenges faced by these aspiring entrepreneurs and employers. It strikes me as a natural progression of the Company and its subsidiaries to join to provide a new unique source of capitalization and to assist in their growth while creating a new revenue stream in a very positive and mutually beneficial way.”

Products and services that provide access to liquidity in blockchain holdings, primarily NFTs, are in high demand as more and more cash pours into the buying and selling of digital assets. This, complemented by the logical implications brought upon by smart contracts in the funding process, has created a peer-to-peer lending space that companies like NFTfi have developed marketplaces in that are now facilitating multi-million dollar loans. 

According to NFTfi, their latest $8.32M loan at 10% APR for 90 days “eclipses” the previous record of an NFT-backed loan that was funded earlier this year, that used 101 Cryptopunks as collateral to unlock $8M of liquidity within those NFTs. The borrowers were all anonymous.

When asked about how to balance crypto’s fundamentals of decentralization while also making an effort to actively incorporate blockchain technology into legacy financial institutions worldwide, NFTfi CEO Stephen Young told deCashed that it comes down to the digital-nativeness of the user.

According to him, despite the access marketplaces like his give to either those who are holding lots of value in NFTs and are cash poor, or those who are looking to put their digital assets to work as lenders, it’s not for everyone. 

“There are certain people that more of a centralized offering is better for,” said Stephen Young, CEO of NFTfi. “If I was going to get my Mom to buy crypto, I would just tell her to buy it on Coinbase and keep it there.”

Young spoke about how many people don’t want to deal with things like digital wallets and private keys that make up crypto’s “ideologically pure” ‘decentralization’ mantra. “For my Mom, self custody is not appropriate.”

Young touched on how easy-to-use centralized platforms allow different types of financial products inspired by blockchain technology to become accessible to a larger pool of potential borrowers. 

“I can see centralized institutions like Coinbase making peer to peer loans viable to users via their platform,” said Young. “With all of their normal KYC, customer support, and everything they do, but they use something like NFTfi as a settlement layer underneath that actually just executes the loans.”

With APR-based scrutiny from regulators pertaining to disclosure being a major factor in the ongoing struggle in the American small business lending space, crypto regulation’s looming presence on the horizon in the states brings lending marketplaces like NFTfi into serious question when it comes to their function in regulated space.

Despite showcasing that their record funding came with an APR of just 10%, some of the loans being processed in the NFT space have calculated APRs of well over 100%. 

When asked about how to justify the fairness of a financial product that has APR percentages in the hundreds, Young spoke on the financial literacy of his customer basse, citing play-to-earn gamers who have created streams of digital incomes or NFT flippers looking to unlock liquidity as part of a broad moneymaking strategy. 

“Almost all of [the borrowers] are making way more than that in return by putting that capital to work,” said Young. “Obviously it doesn’t always work out for people, but these are people using these things as financial tools as part of a broader strategy during in which that type of transaction makes sense.”

In such a new space, Young said right now his focus is on facilitating a place where those with large amounts of digital assets can best leverage them for their liquidity. ‘These people are NFT rich, and cash poor,” said Young. 

When asked about long term practicality, Young hinted at the smart contract being the key facilitator and point of value in these types of financial products being widely incorporated. “[Smart contracts] allow a speed of a transaction that you can’t really do in the real world,” he said. “I think that it’s also going to allow us to involve financial products that you can use in the real world.”