Digital asset lender Ledn is transitioning to fully collateralized Bitcoin lending and discontinuing support for Ethereum

Ledn will no longer lend out client assets to generate interest, the company disclosed on May 23. Instead, Bitcoin collateral will remain under full custody by Ledn or one of its designated funding partners.

Digital asset lender Ledn is transitioning to fully collateralized Bitcoin lending and discontinuing support for Ethereum, in moves designed to consolidate its BTC-focused business and further safeguard client assets against credit risks.

In adopting a full custody structure for Bitcoin (BTC) loans, Ledn will no longer be lending out client assets to generate interest, the company disclosed on May 23. Instead, Bitcoin collateral will remain in full custody with Ledn or one of its designated funding partners.

“This means assets aren’t rehypothecated, reused, or loaned out to generate yield,” Ledn co-founder and CEO Adam Reeds told Cointelegraph.

Reeds said the move brings the company back to its roots and aligns more closely with Bitcoin’s founding principles.

“Bitcoin was created as a direct response to the risks of fractional reserve banking and unchecked use of client assets to generate interest,” said Reed, adding:

Bitcoin is best used as money, not an asset to be exploited by lenders for maximal return.

However, the company is closing the final chapter on its Ethereum lending operations as part of a broader strategic shift, given that Bitcoin comprises over 99% of Ledn’s client activity.

“Rather than fragmenting the platform to chase marginal volume, we’re going all-in on Bitcoin and simplifying our stack to reflect what our clients actually value,” said Reed.

Founded in 2018, Ledn has become one of the largest lenders in the digital asset space, with a loan book value of $9.9 billion, according to Galaxy Research. The company enables Bitcoin holders to borrow against their assets, providing them with liquidity without having to sell their holdings or trigger a taxable event.

This approach is commonly used by wealthy investors, who take out low-interest loans against stocks, real estate, and other assets to access cash.

Related: ‘Before Bitcoin, my most successful investment was shorting the Bolivar’ — Ledn co-founder

Digital assets are disrupting TradFi

Bitcoin’s genesis block was mined in the wake of the global financial crisis in 2008, offering the world a sound money alternative to the inflation-prone fiat monetary system.

Bitcoin has since flourished within traditional finance, especially after the successful launch of spot exchange-traded funds (ETFs) in 2024.

While financial institutions are increasingly embracing Bitcoin, some members of the banking lobby are reportedly concerned about other blockchain innovations disrupting their business models.

Specifically, the banking lobby is “panicking” over yield-bearing stablecoins, which can pay higher interest rates and other financial incentives that traditional banks have largely abandoned, according to New York University professor Austin Campbell.

Referring to banks as a “cartel,” Campbell said financial institutions rely on fractional reserves to maximize profits while offering depositors minimal interest.