Unifred Unifred 06.06.2024

Galaxy Digital Tokenizes Centuries-Old Violin as Loan Collateral

Crypto-focused financial firm Galaxy Digital has initiated a new way of issuing loans. This week, the firm issued an undisclosed “multi-million dollar loan” to Animoca Brands’ co-founder Yat Siu. The loan was collateralized using a 316-year-old Stradivarius violin, which is currently held by a Hong Kong-based custodian.

The Stradivarius violin dates back to 1708 when it was owned by the Russian Empress Catherine the Great. According to Tarisio, an auction house themed on stringed instruments, the centuries-old violin was initially acquired by the Russian ambassador to Venice as a gift for Empress Elizabeth Petrovna who reigned over the Russian Empire. After her death, her successor Catherine the Great (aka Catherine II) became the new owner. Today, the antique violin is named after Empress Caterina.

Yat Siu acquired the antique violin last year via an auction for over $9 million. Fast-forward to the present, and he has used it as collateral for a multi-million-dollar loan. Upon receiving the violin, Galaxy Digital created an NFT version for the physical stringed instrument through GK8, its cybersecurity subsidiary aimed at safeguarding digital assets. Siu will reclaim ownership of the musical instrument after completing the loan repayment.

Siu explained that he might use the loan to invest in new crypto initiatives or art projects. Fascinated by how physical assets can be tokenized, the Animoca Brands co-founder stated:

“I was thinking about how we can create something special like [the tokenization of physical items] to have broader access. It was also a good way — although it wasn’t required — to get additional liquidity.”

Siu hinted at the idea that the NFT violin may be fractionalized to allow other users to own a claim of the antique piece. However, he confirmed that there are no guarantees as to a follow-up on that idea.

Notwithstanding, the idea of tokenizing a physical item or experience to be used as collateral for a loan is interesting. Thomas Cowan, a Galaxy Digital executive, echoed that more items like real estate or fine art can be collateralized in the future. Time will tell if such ideas will come to limelight.