Crypto lender Maple Finance raises $5 million to get a foothold in Asia amid regulatory clarity

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Maple Finance, an on-chain institutional lending marketplace looking to fill a gap created by the collapse of crypto lending heavyweights like BlockFi and Celsius, has set its sights on Asia as financial centers like Hong Kong and Singapore bring greater regulatory clarity to digital assets .

Maple, which falls under the decentralized finance (DeFi) category, differs from centralized finance or CeFi platforms like BlockFi in that it allows lenders to see lending transactions on the blockchain, promising greater transparency. In total, the three-year-old startup has issued $2.2 billion in loans and currently has around $50 million on the platform.

To fuel its eastward expansion, Maple recently closed a $5 million strategic investment from a group of crypto-focused investors. The round was led by BlockTower Capital and Tioga Capital, with participation from Cherry Ventures, Spartan Capital, GSR Ventures and Veris Ventures, as well as previous investors Maven 11 and Framework Ventures.

“In Asia, there is regulatory clarity, or rather regulatory support, coming from both Hong Kong and Singapore in terms of passing new legislation, and there is already a very strong focus on trade there,” said Sidney Powell, Co – Founder and CEO of Maple told TechCrunch.

While Maple’s two dozen employees are primarily spread across Western Europe and North America, some of its key borrowers come from Hong Kong and Singapore.

“A lot of the more bullish trading activity that’s happening in terms of bitcoin price action has been largely driven by trading activity outside of the Asian time zone based on the times the trading happened, so I’m seeing a really big one.” Opportunity to become more active locally,” said the founder, adding that Maple plans to hire its first workforce in the region.

DeFi’s promise

The “DeFi summer” of 2021, which saw a surge in interest from retail investors in financial products based on Ethereum smart contracts, “has generated a lot of speculation,” admitted Powell, but argued that yield farming, which allows users to generate high returns by providing liquidity to DeFi protocols, “Also got the room going.” Now that the crypto market has cooled significantly, 2023 is the year DeFi “needs to prove the use case,” he said.

Decentralized lending platforms, in particular, have promised to offer more financial inclusion to small and medium-sized businesses by giving them access to unsecured loans. The idea is commendable, but some industry backlash has led to reckoning with the design flaws of these platforms.

Goldfinch, a DeFi protocol that lends to real-world businesses, faced a significant loan default after a Kenyan motorcycle company recently breached its loan agreement. Maple suffered its own setback after several borrowers defaulted on payments following the FTX implosion, leading to a temporary suspension of its loan pools on Solana, an Ethereum challenger said to have close ties to FTX founder Sam Bankman-Fried.

Maple started out as a lending marketplace that brought together institutional lenders and borrowers, but has recently launched its own direct lending business, offering loans that are over-collateralized and backed by bitcoin, ether, and ether pledged collateral.

“Other players are trying to just focus on building the technology, like Uber and Airbnb. We tried to act as an underwriter, so we need to demonstrate credit competence. I think it gives us a little more control over the outcome and it’s a little bit closer to Apple in that it’s more vertically integrated,” Powell explained of Maple’s decision to start his own lending division.

“I think now is the time to do that as all other competitors are gone and that has created an opportunity for us to step in and offer a product,” he continued. “But this product needs improvement compared to what they made. With these players, you couldn’t see how the credits were developing; But when I publish a loan on the blockchain, you can always see how it is performing. So I can never lie to you that our loan book is doing well when it isn’t.”

real assets

Maple is also working to diversify its customer base. In the early days, many of its borrowers were market makers providing liquidity to crypto exchanges. As trading volume remains low during the market downturn, the lending platform is now touting safer products like tokenized Treasury bills or T-bills for those who want low-risk interest rates.

“This is interesting for startups that may have had a seed or Series A round of funding because they just want to put their money somewhere that’s relatively safe and they know they can get it back in the short term,” Powell said .

In the meantime, Maple plans to offer trade finance to real-world businesses, such as a traditional trading company that needs a loan to finance shipping a product overseas. This new focus fits “very well” with expansion in Asia, according to Powell, particularly into major shipping hubs such as Hong Kong and Singapore.

“Import and export business is something we could potentially fund a loan pool on Maple for. We have already been offered some trade finance deals, so I hope to establish business relationships locally in Singapore and Hong Kong,” said the founder.

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