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Draw Bridge Lending CEO Jason Urban on Block Chain & Crypto Currency Lending - YouTube
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Lee Neubecker(LN): Hi, I have
Jason Urban on the show today.
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He's the President and
CEO of DrawBridge Lending.
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Thanks for being on the show Jason.
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- Thanks for having me, Lee.
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This is great, glad to be here today.
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- Jason, I've known you for awhile.
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You've been doing some innovative things
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in the lending industry as it relates
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to bitcoin and block chain.
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Tell us a little bit about that.
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Jason Urban(JU): Sure, so
what we do is we're a lender
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against secured digital asset holdings
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and what we are providing is
the draw bridge, or the bridge,
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from these traditional lending sources,
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or pools of liquidity,
into this new ecosystem
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where everybody is trying to figure out
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how that landscape works.
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LN: What type of people would
have a need for your service?
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JU: I think they're are
a wide variety of people.
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People who have these digital assets
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and because of the way they're categorized
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here in the States from
the IRS perspective,
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when you spend them, when you use them,
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you encounter a taxable situation,
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but to the extent that you might
need to pay your power bill
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or to go on a vacation or buy
that boat you always wanted,
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you need fiat, you need US dollars,
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and what we provide is
a mechanism or platform
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for people to borrow against
the digital asset holders.
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LN: So, if someone's
sitting on say 100 bitcoin,
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which is quite a bit of money,
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you'd allow them to take out
a loan against that bit coin
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and use that for short term
cash expense or whatever?
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JU: Yes
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LN: What is the duration
of your loans typically?
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JU: We typically focus one to six months.
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It's a very volatile asset,
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and our backgrounds are
managing that volatility,
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but there's only so much you can do
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when something moves as
rapidly as that does,
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which is an advantage to the asset,
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but it's also difficult
from a lending capacity.
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So our loans are one to
six months in duration,
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and we offer renewal options,
so you can re-up and renew.
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Just the strike price
of that loan to value,
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think about your home moving
50% in a six month period,
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you might want to refi
or you might need to put
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more money up. We try to
mitigate a lot of those risks
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by offering the durations we do.
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LN: So, your clients actually give you
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their cryptocurrency and
you escrow it for them?
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JU: Yes, so what we do is we don't like
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to take possession of their currency.
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What we like to do is use a
qualified third party custodian
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so that their digital
assets are resting there,
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so they know they're there,
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and I can't take them unless
they default on a loan
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or something unfortunate happens.
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All we want to do is provide
a mechanism or a platform
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for someone to monetize their holdings.
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We don't want to take possession of them.
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We don't want their private keys.
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We'll only take those in the event
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that they default or want
us to satisfy their loan.
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LN: So in this business,
what measures do you take
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to help ensure that these
digital assets are safe
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from a cyber attack perspective?
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JU: Well, part of it, the
key for us, is cold storage.
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And cold storage is basically
storing these things
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on a server or computer
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where it's not connected to the internet.
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It can't be taken, so we require
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that all our custodians
deploy a cold storage method
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as opposed to a warm
storage or a hot storage.
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That way we know that the gold
is in the vault so to speak
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but that it's not going
to be readily accessible
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to anybody out there.
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LN: Have you had a situation
where a customer gets angry
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because a price fluctuates
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and they feel that they were
cheated out of there value?
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JU: Interestingly we
don't have that problem
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because of the mechanisms that
we deploy on the back end.
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So all our loans are no
margin call and non-recourse
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unlike a lot of people in the business
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that will have you retop.
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Think about it this way,
if I issue you a loan
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on an asset that's worth $10,000,
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and I give you 50% of that asset in cash,
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if the value of that asset
goes from 10,000 to 5,000,
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I now need to create that cushion again,
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so you need to pay me more
money or reup or figure out.
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What we've developed, and our methodology,
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is a way to never have
to worry about that,
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and we use the financial markets.
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We're markets experts,
and we're risk managers,
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so we have mechanisms
by which we can ensure
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that you don't have to worry
about topping off your loan.
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LN: Are there any restrictions
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on the type of customers you can have
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based on what the SEC imposes on you?
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JU: We are very compliant, so
we are registered by the CFDC,
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and we follow all the rules
and regs imposed on us by them.
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We have to do AMLKYC,
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anti-money laundering know your customer.
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We're registered as a
non-bank lender in all 50,
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or in 31 states.
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We operate in all 50 states
so that we're following
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not only consumer lending
laws but also securities laws
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and commodities laws.
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LN: Are there any requirements
you have on customers
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before you can take them as a client?
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Well one, we have to
do the AMLKYC on them.
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Right now, our products are geared
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towards accredited investors.
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Because of the way we do
the hedging on the back end
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we need to make sure that those customers
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are sophisticated enough to
understand what we're doing.
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And so in order to do that,
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we need to put that accredited
investor cap on things.
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It's a little different
under the CFDC umbrella.
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They call them qualified
exchange participants, or ECPs,
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so there's a couple of
different buckets you wear,
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but it's a little different
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than the SEC's accredited investor,
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but effectively it's the same thing.
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LN: Is there a minimum net worth
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that your customer's have to have?
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JU: And that's part of it,
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a minimum net worth of a million dollars,
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or an entity that's a million dollars
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that's what we require.
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LN: What sectors do you see
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that this type of lending
is getting the most interest
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in terms of where your
clients are coming from?
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JU: A wide variety, if
you really think about it,
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bitcoin, or digital assets as a whole,
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can be held by anyone.
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It isn't a single group that says,
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"Hey, I'm really into this."
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So we see funds, minors,
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people who were early
adopters of the technology,
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they've all kind of stepped forward.
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Additionally, we've got
a product that's geared
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towards people who would
like to buy bitcoin
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and want to employ some
of the same methodologies
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that we're employing right now.
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LN: Do you have any closing
thoughts you'd like to share?
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JU: I think that people
often confuse block chain
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and decentralized ledgers with bit coin.
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I think the block chain
technology is interesting
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on so many levels.
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I think that as the world
becomes more tokenized,
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and I think you're going to
see more and more of that,
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everything from the artwork
that you see on the walls
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to buildings to physical
assets like gold, silver, oil.
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The world is moving towards
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that technology and that methodology,
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and I think that being an early adopter
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and understanding it is so important.
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If you want to make the same parallels,
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this is the internet in 1990 or 1995.
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The difference is the world
moves much faster today
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than it did back then.
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LN: So are you taking investors?
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JU: We're always willing
to have strategic investors
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come into the space, and
we're not opposed to that.
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We're very well capitalized,
but we do recognize
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the value in being partners with people.
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And part of being partners
is financial as well.
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LN: Well thanks again
for being on the show.
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JU: Thank you very much.
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