Ledn publishes industry’s first monthly loan book and margin data

Ledn, one of the world’s largest Bitcoin lenders, has released its Open Book Report, a reserve transparency benchmark that aims to reveal the types of risks that caused the 2022 FTX-led crypto crash.

According to a press release shared with Bitcoin Magazine, “Traditional financial players (such as Citi, JPMorgan, Wells Fargo, BNY Mellon, Schwab, and Bank of America) are reportedly entering the space in a regulatory vacuum in terms of rehypothecation practices and proving reserves.” The passage of the GENIUS Act, which greenlit Treasury-backed stablecoins, also gave Wall Street a way to service the crypto market and upgrade its own rails and infrastructure.

However, there are still calls for a clearer regulatory structure for crypto counterparties, Leadon pointed out, adding, “Global rules regarding crypto capital requirements and proof of reserves remain in flux, with the US and UK expected to implement the Basel proposed framework. “While IOSCO is calling on regulators to ensure that cryptocurrencies are stored and loaned in line with traditional financial standards, few institutions have disclosed how their Bitcoin collateral is managed.” What happens in a rehypothecation or liquidation scenario? ”

John Glover, Reddon’s chief investment officer and former managing director at Barclays, explained: “If lenders don’t have to disclose how they use customer collateral, customers become leveraged. We saw what happened when BlockFi, Celsius and Voyager were operating in the shadows. The difference now is they have larger balance sheets.” “This is how a 2022-style financial crisis will occur on an institutional scale,” he warned.

Ledn’s Open Book Report, released today, features “the industry’s longest-running Proof of Reserves,” according to a press release. This report reveals Ledn’s BTC loan balance, collateral level, and total loan-to-value ratio. The report said U.S.-based CPA Network Firm LLP conducted an independent audit and confirmed that 100% of the collateral was in custody.

The report also reveals that “$868 million in BTC-backed loan balances are 100% BTC-custodial, with 18,488 BTC collateral pledged. All BTC collateral is stored in on-chain addresses and/or custodial accounts.” Ledn’s average loan-to-value ratio is 55%, with total LTV well below industry liquidation standards. Since 2018, the company has funded “$10.2 billion in lifetime loans for 47,000 originations.”

The framework aims to move the industry away from one-time snapshots and lays the foundation for more continuous, real-time transparency over time, starting with monthly disclosures. Unlike self-declared wallet addresses, Ledn’s approach combines monthly reporting on loan book metrics such as loan balances, collateral posted, and average LTV with reporting from The Network Firm LLP. Ledn also maintains a semi-annual (bi-quarterly) certificate of reserve proof confirming that assets exceed customer liabilities, using the ‘Merkle Tree Methodology’ which allows customers to verify that their balances are included.

Some companies have announced “proof of reserves” by publishing their wallet addresses, but Glover argues that this is not enough. “True transparency requires independent reporting, regular updates, and a methodology that everyone can review,” Glover said. “Clients don’t have to take anyone’s word for it.”

Ledn recently received a strategic investment from Tether and has a perfect track record of protecting customer assets across loan originations and weathering the 2022 crypto lender crisis and at least one bear market before that.

The press release warns, “As traditional financial institutions accelerate their entry into Bitcoin-backed lending, Leadon’s open book report establishes a baseline for these new entrants to hold before regulators mandate it.”