The crypto lending landscape has undergone a seismic shift following the 2022 market crash and the high-profile collapses of major centralized platforms like Celsius, Voyager, and BlockFi. With public trust shaken and regulatory scrutiny intensifying, many have questioned whether crypto lending is dead. The answer is no — but the industry must evolve to survive.
While several platforms have vanished, others have adapted, strengthened their compliance frameworks, and emerged as credible players. Meanwhile, new entrants are redefining what responsible crypto lending looks like. This article explores who’s stepping up to fill the void, what structural changes are necessary, and how the future of crypto lending might look.
Survivors in a Shifting Landscape
Despite the turmoil, some platforms have not only survived but are actively rebuilding trust through transparency and regulatory alignment.
Ledn stands out as one of the few lending platforms that maintained operations throughout the crisis. In a move signaling long-term commitment to accountability, Ledn appointed Deloitte as its external auditor in 2023. This audit complements the biannual Proof of Reserves reports conducted by Armanino LLP, enhancing confidence among users concerned about asset backing.
However, regulatory pressures remain a challenge. In January 2022, Ledn suspended certain services for Canadian customers, including BTC and USDC savings accounts, trading, and loans. These restrictions reflect the growing complexity of navigating local financial regulations in a decentralized global market.
Another notable survivor is Nexo Capital, though it has faced significant legal hurdles. The company ceased U.S. operations after receiving cease-and-desist orders from multiple state regulators. The U.S. Securities and Exchange Commission (SEC) accused Nexo of offering unregistered securities through its "Earn Interest" product, leading to a settlement in which Nexo agreed to halt the program and pay $45 million in penalties.
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Despite these setbacks, Nexo continues operating internationally, underscoring demand for crypto-backed lending products — provided they align with evolving compliance standards.
New Entrants: Innovation Meets Regulation
A new wave of fintech startups is entering the space with a focus on compliance-first models. One such player is Arch, a New York-based platform launched in late 2022. Arch recently raised $2.75 million to support its first crypto lending product, aiming to serve alternative asset investors.
What sets Arch apart is its vision: enabling borrowers to collateralize a diversified portfolio — starting with crypto, but expanding to pre-IPO equity, real estate, and public stocks. By leveraging BitGo for custody and structuring loans in USD or USDC, Arch combines institutional-grade security with innovative financing solutions.
Currently licensed in 31 U.S. states, Arch plans to use its funding to expand regulatory approvals — a strategic move highlighting how modern lenders are prioritizing legitimacy over rapid growth.
Making a Comeback: Salt Lending’s Reinvention
Salt Lending, one of the earliest crypto loan providers, is attempting a strong comeback. In September 2023, the Denver-based firm closed a $64.4 million funding round aimed at strengthening its balance sheet and fueling growth initiatives.
This capital — raised from accredited investors in exchange for preferred shares — will support Salt’s full relaunch, expected by Q1 2024 pending regulatory approval. The company had previously paused withdrawals and deposits after losing liquidity exposure to FTX, which served as a key funding source.
“Crypto faced a perfect storm in 2022,” said Shawn Owen, Salt’s founder and interim CEO. “But we’re determined to come back stronger.”
Although Salt lost its California lending license during the downturn and abandoned a proposed sale to Bnk To The Future, it’s now working closely with state regulators to regain compliance. Transparency remains central to its recovery strategy.
Owen emphasized: “We’re being as open as possible about our operations — though we can’t guarantee outcomes, as regulators have discretion.”
Looking ahead, Salt plans another funding round — potentially up to $1 billion — to build a robust capital buffer and position itself as a resilient player in the next phase of crypto finance.
Why the Industry Needs Structural Reform
The collapse of Genesis Global Capital in early 2023 — once FTX’s largest unsecured lender — exposed deep systemic risks. It followed bankruptcies of Celsius, Voyager, and BlockFi, all interconnected through opaque lending relationships and excessive leverage.
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Three core issues must be addressed for sustainable recovery:
1. Overcollateralization
Unlike traditional banks, most crypto lenders don’t maintain capital buffers. Instead, they rely on collateral — often volatile digital assets. When prices plunge (e.g., TerraUSD/Luna), undercollateralized loans trigger cascading liquidations.
Solution? Enforce strict overcollateralization (e.g., 150%+ loan-to-value ratios) to absorb market shocks.
2. Capital Reserves
Crypto lacks FDIC insurance. Therefore, platforms must hold sufficient equity reserves to protect users during downturns — a practice more common in traditional finance (TradFi).
3. Transparency & Audits
Regular third-party audits and real-time reserve verification can prevent hidden insolvency. Proof-of-reserves alone isn’t enough; ongoing attestation builds lasting trust.
The Rise of NFT Lending
Interestingly, while traditional crypto lending stumbles, NFT lending is surging. In April 2023, NFT loan volume hit $444 million across 17,900 transactions, according to NFTGators. The average loan was valued at 4.399 ETH (~$61.5K), with borrowers receiving ~90 ETH per lender.
This growth reflects rising demand for liquidity without selling rare digital assets. As competition increases among lenders, borrowing costs are falling — benefiting creators and collectors alike.
FAQs: Your Questions Answered
Q: Is crypto lending safe now?
A: It’s safer than before — but due diligence is essential. Stick to platforms with audits, clear collateral policies, and regulatory compliance.
Q: Can I earn interest on crypto safely?
A: Yes — but avoid promises of ultra-high yields. Look for overcollateralized, transparent models rather than unregistered "earn" programs.
Q: Are DeFi loans safer than centralized ones?
A: Often yes — because smart contracts enforce rules automatically. However, smart contract risk still exists.
Q: Will traditional banks enter crypto lending?
A: Likely. Institutions like JPMorgan and Goldman Sachs are already exploring blockchain integration. Their risk management expertise could stabilize the sector.
Q: What happened to FTX-linked lenders?
A: Many failed due to exposure to FTX/Alameda. Genesis, BlockFi, and others collapsed or restructured under Chapter 11.
Q: How can I protect my funds?
A: Use non-custodial options when possible, verify reserves, diversify across platforms, and never invest more than you can afford to lose.
The Road Ahead
The future of crypto lending isn’t about replicating the past — it’s about building smarter systems grounded in transparency, compliance, and resilience.
Decentralized Finance (DeFi) protocols offer permissionless access and immutable transaction records, while TradFi brings risk management rigor. The convergence of both worlds could deliver superior financial products: cheaper loans, faster settlements, and broader access.
New entrants like Arch and returning players like Salt show that innovation persists — but only for those willing to play by the rules.
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As trust rebuilds and regulations clarify, we may see a resurgence of reliable crypto lenders by late 2025. Whether through DeFi protocols or compliant centralized platforms, demand for crypto-backed credit remains strong.
The storm isn’t fully over — but the path forward is becoming clearer.
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