Blockstream new institutional-grade Bitcoin investment solutions offer Bitcoin-native financing with different types of collateral.
Blockstream, a blockchain technology company creating crypto-financial infrastructure based on Bitcoin, has introduced three new institutional crypto-focused funds, including two that will enable Bitcoin lending.
The funds, to launch on April 1, allow institutional investors to lend and borrow with Bitcoin collateral or USD collateral and offer institutional-grade exposure to Bitcoin markets. External capital will be accepted starting July 1.
The three funds will be handled by a separate corporate division – Blockstream Asset Management (BAM) – that launched this January.
One of these funds will focus on underwriting loans that are backed by Bitcoin, providing a structured way for borrowers to access liquidity without selling their holdings. Another fund will facilitate cryptocurrency borrowing, allowing institutions to use US dollars as collateral. Finally, a third fund will be dedicated to implementing hedge fund strategies, leveraging various market approaches to optimize returns in the crypto space.
According to the earlier announcement, the funds will bear the following names: Blockstream Income Fund, the Blockstream Alpha Fund, and the Blockstream Yield Fund.
The Income Fund aims to generate stable, predictable USD-denominated yields by providing loans secured with Bitcoin collateral. It is targeting loan amounts between $100,000 and $5 million, focusing on conservative loan-to-value (LTV) ratios to ensure robust collateralization and sound risk management typically associated with traditional finance. The fund will leverage Blockstream’s extensive network of Bitcoin-native startups and businesses with digital asset treasuries to maintain a consistent pipeline of high-quality borrowers.
The Alpha Fund is designed for investors seeking higher returns. It employs diverse and uncorrelated strategies within the Bitcoin ecosystem, including derivatives trading, event-driven opportunities, basis trading, and infrastructure-based revenue streams such as Lightning Network node operations. This actively managed fund aims to offer consistent, risk-adjusted outperformance by capitalizing on various market opportunities.
The Blockstream Income Fund and Blockstream Alpha Fund introduce a new category of regulated financial products under the 506(c) exemption, specifically designed to offer innovative and high-performance Bitcoin investment opportunities for institutional and accredited investors.
The Blockstream Yield Fund is offering Bitcoin holders consistent, low-risk returns on their crypto holdings through Bitcoin-backed yield opportunities without the need to sell the crypto.
Their launch is enabled by a recent multibillion-dollar investment as reported by Bloomberg. However, specific details about the investors and the exact timing have not been publicly disclosed. As for the publicly available information, the Canadian firm secured $210 million in financing through a convertible notes round led by Fulgur Ventures last October. In 2023, the company also raised $125M funding to expand the Bitcoin mining capacity for institutional hosting customers.
