Chinese Bitcoin Exchange Accepts BTC as Stock Collateral

By May 6, 2015Bitcoin Business
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Chinese Bitcoin Exchange Accepts BTC as Stock Collateral

Through its platform called Caimao, Chinese bitcoin exchange Huobi is accepting BTC as stock trading collateral. This service will allow clients to mortgage their bitcoins in exchange for Chinese yuan loans to buy shares on the Shanghai Stock Exchange.

This can allow investors who have lost money due to the bitcoin price slump in the past few months to still make use of the asset and borrow up to 60% of their BTC deposit value. The funds used for borrowing are supplied by a third-party provider.

Bitcoin Exchange and Stock Trading

These loans are offered at 0.1% interest per day and at 1.2-1.7% interest per month. Clients could secure loans from a tenor of six months to a year, but the bitcoin exchange anticipates that there will be stronger demand for short-term investors.

By the loan’s maturity, the customer will pay back the borrowed amount including interest. The initial BTC deposit can also be withdrawn, after incorporating the resulting profits or losses.

Other bitcoin exchange companies in China have already been running this BTC-as-collateral type of loan for quite some time now. BTCTrade has launched its Yuanbao loan service last year, allows customers to borrow up to 60% of their bitcoins’ value and lets them set their own interest rates and term limits within recommended parameters. Huobi is confident that the deep liquidity of its bitcoin exchange could allow the company to still honor forced liquidations at target prices.

“Huobi’s long-term vision is a world in which anyone anywhere can invest in anything. Five years ago, the idea of connecting all of the world’s capital markets and providing equal access for every person would have seemed like a fantasy, but bitcoin has provided the conceptual and technological foundation for this vision to become a reality,” said Robert Kuhne. The company plans to offer this type of service to anyone, but at the moment the loans are available for mainland Chinese investors only.

This can allow investors who have lost money due to the bitcoin price slump in the past few months to still make use of the asset and borrow up to 60% of their BTC deposit […]

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