Crypto-lending platform Nexo has today, March 25, opened up the option of using PAX Gold (PAXG) as collateral against its loans to retail investors. A pilot scheme in late 2019 was limited to institutional clients and purportedly saw immediate demand for its gold-backed credit lines.
Nexo’s announcement means that collateralized borrowing against high-grade gold is now no longer the preserve of the ultra-rich.
Launched in September 2019, Paxos’ PAX Gold token is fully-backed by and redeemable for physical gold, stored in secure vaults.
Each token represents one fine troy ounce of London Good Delivery Gold, and enables ownership of gold as a safe-haven asset, with the added convenience afforded by tokenization.
Pilot scheme prompts $5 million investment
Nexo saw such demand for gold-backed credit from institutional clients during its pilot scheme that it invested in $5 million worth of PAXG to meet investors’ needs.
The expansion of this pilot to include retail clients now allows anyone to leverage gold-backed PAXG assets as collateral on the Nexo platform. Antoni Trenchev, co-founder of Nexo, explained the allure:
“Especially in high-volatility times, as in the present, gold is sought after by many of our retail clients and we have worked towards reflecting their wishes.”
The crypto loans industry has seen solid growth, as many cryptocurrency holders prefer to leverage their assets as collateral rather than liquidate them.