A blockchain-based lending firm Figure Technologies (FT) has announced that it has experienced over 300% increase in loan applications since the US Federal Reserve Bank has decided to slash interest rates in the country. The Federal Reserve Bank or The Fed as it is generally slashed interest rates in the USA after the threat of Corona virus and its impacts on the world economy are starting to to be felt around the world.
FT, a pioneer in blockchain-based fiat lending has seen its overall loans reached a massive figure of around $1 billion. FT had pioneered in the industry with Provenance, its native enterprise blockchain platform. The platform has seen renewed interest and applications from users across the country as soon as the Fed announced discount rates to try and minimize the economic impact of the deadly Coronavirus spreading across the globe.
The Threat of Coronavirus
The Coronavirus has spread across the world and multiple countries are entering into lockdown thus causing massive problems in trade and general commercial activity. To counter this negative trend, the central banks around the world are reducing their interest rates to help prop up the economy. In the face of a pandemic like the Cronavirus, it may not help in the long-term as countries take drastic measures like lockdowns and quarantines. Nevertheless, at least the short-term repercussions are expected to be much better because of the lowered interest rate. This medium recovery may be seen across the world as markets are recovering some losses and investment institutions are nervously posting some gains.
Increase in Loan Applications
Due to this approach by The Fed, loan firms like FT are experiencing considerable increase in loan applications. The company offers various blockchain-based solutions including a service called HELOCs that allow users to obtain loans by putting up their houses as collateral. The company also released that the average size of the loan applied per household was around $50,000 per household.
According to Mike Cagney, the co-founder of the company:
“The 300 percent increase in applications suggests consumers are eager to take advantage of unprecedented lower rates across mortgages, HELOCs and student loan refinancing.”
FT had a successful Series C funding in 2019 when it sealed a $100 million seed funding from Morgan Creek Digital, Mitsubishi UFJ Financial Group’s venture capital arm, MUFG Innovation Partners.
Founder Cagney believes that the future of low-rate loans will make blockchain-based lending even more popular. Overall, the debt market and a medium bounce in the markets can be experienced around the world because of the loosening of the interest rate but that may not mean that the extent of the damage has seen its worst.
The Uncertain Future
Overall, the economy is expected to suffer losses in the regions of hundreds of billions of dollars due to the reduction of trade and commercial activity around the world due to the coronavirus. Cryptocurrencies may survive this scarce as they are seen by many as a measure of decentralized storage of value. But, currently, the market trend is sloping downwards.