-- Reinvented from the traditional securities lending legal framework, the GDALA brings trust, transparency, and safety to institutional market participants accessing crypto lending markets --
Lendingblock, the regulated, open exchange for institutional borrowing and lending of digital assets launches the first Global Digital Assets Lending Agreement (GDALA) setting a new benchmark and industry standard in crypto.
With legal counsel and support from Norton Rose Fulbright, the GDALA has been developed using a “master agreement” framework that is typically seen in the traditional capital markets, such as ISLA’s Global Master Securities Lending Agreements, ICMA/SIFMA’s Global Master Repurchase Agreements and ISDA’s Master Agreements, and applying it to crypto. This new legal foundation that Lendingblock’s lending markets are built on marks a key milestone in crypto because it exemplifies the application of conventional capital markets frameworks to institutional crypto markets in a customized and enhanced way to suit and protect crypto market participants in what is a growing, but still nascent, lending market.
The GDALA governs the terms of the loan transaction between a borrower and a lender, by providing a bilateral agreement between the accredited counterparties whereby both participants enter into a binding transaction via an onscreen confirmation inside the Lendingblock exchange. The agreement also outlines the tri-party structure in Lendingblock’s lending exchange, whereby there is an acting security trustee to manage the risk on behalf of the counterparties. The collateral is provided under separate wallet security terms.
Steve Swain, CEO, Lendingblock, said “As part of our journey to reinvent the traditional capital markets securities lending model, we saw an opportunity to also reinvent the legal framework that protects both parties in the exchange.
“Security and transparency for our institutional clients has been at the centre point of development in the lead up to our platform launch. As such, we sought guidance from Norton Rose Fulbright and collaborated to ensure that the agreements our clients use are of international and institutional standard and provide the security they need to transact in these markets today and beyond.
“The introduction of the GDALA, not only supports the endeavours of Lendingblock, but leads the way for other industry bodies in the digital asset arena. This was a critical milestone for the launch of our platform, to support the lending and borrowing needs of our clients.”
Daniel Franks, Partner at Norton Rose Fulbright added “We have seen the benefits of master agreements for decades in the traditional capital markets space. The crypto markets have, until now, not benefited from this type of legal technology. Together with the also-innovative wallet security terms over the crypto collateral, the GDALA will greatly facilitate crypto borrowing on the Lendingblock platform, and we were delighted to be at the forefront of developing them. We hope that this enables the further progression of this cutting-edge market.
To gain further insight into the development of the GDALA, read our interview with Steve Swain and Daniel Franks here.