Galaxy Digital has released a report on the cryptocurrency lending market, highlighting the central role of stablecoin issuer Tether. All the major centralized lenders in the previous crypto boom went bankrupt, and Tether has stepped into the void, becoming the dominant player with around 73% of the market. Since the last boom, the majority of crypto lending has shifted from centralized lending to DeFi lending.

Tether doesn’t hide its lending activities. Its stablecoin report for the end of 2024 shows its reserves include a secured lending balance of $8.2 billion. According to Galaxy’s data, the entire market for centralized crypto loans outstanding at the end of 2024 was $9.9 billion, with Tether having a market share of around 73%. This implies a minority of Tether’s loans are not for cryptocurrencies.

Many countries introducing stablecoin legislation prevent stablecoin issuers from participating in lending. That’s in part because they start to look like banks, including from a risk perspective. Doubtless Tether would point to the $7 billion in equity sitting within the issuer, which would cover a lot of mis-steps. However, the $8.2 billion lending sits alongside several other risky or volatile assets, including almost $8 billion in bitcoin.

Crypto lending: a risky business

The top three centralized lenders are Tether, Galaxy and Ledn, with a combined share of 88.6% of the centralized finance (CeFi) market. Whether or not that’s a good group to be part of remains to be seen, given the graphic showing the number of previous participants that went bankrupt.

However, Galaxy highlighted some of the risks taken by the previous batch of lenders, implying that practices have changed. For example, the previous lenders tended to lend long and borrow short term rather like banks, so they got into trouble when they needed more liquidity. Both Celsius and BlockFi also extended some loans without collateral.

Galaxy also pointed to the entrance of traditional finance (TradFi) players, including Cantor Fitzgerald, formerly led by the current US Commerce Secretary Howard Lutnick. Cantor previously announced plans to start crypto lending with $2 billion of financing initially. That could make it one of the larger players. The report also stated that SAB 121, which prevented banks from providing crypto custody also indirectly blocked them from involvement in lending because they needed to take custody. We’d note that Basel crypto rules for banks also make it tricky, although the rules do allow some hedging for crypto, hence collateralized loans can be partially offset.

Since the previous crypto crises, the balance of crypto lending has moved to decentralized finance (DeFi) which held up well during volatile times. At the height of the previous boom, DeFi made up just over a third, whereas now it is dominant. However, that’s in part because CeFi lending outstanding at the end of 2024 was only around a third of its peak in 2021. The figures exclude crypto collateralized products (CDP) – stablecoins backed by crypto.

With new centralized lenders attracted to the market, the pendulum could swing back.

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There’s a news report circulating that China announced it had linked its digital RMB cross border payment system to ten ASEAN countries and six Middle Eastern jurisdictions. We have not been able to trace this to a reliable source, so it may be fake news. However, the substance of the report is not a million miles from the facts. It’s likely jumping the gun by a few years.

China is a member of mBridge, a cross border payments joint venture using central bank digital currency (CBDC). The Chinese end of any payments uses its digital RMB CBDC, but mBridge does not belong to China. Other member countries include Hong Kong, Thailand, the UAE and Saudi Arabia. As of late last year there were a couple of dozen observers. If one counts the observers (which is a big leap) then it would have covered five ASEAN countries and six Middle Eastern ones.

Why mBridge is not a threat. Yet.

The first English language report about the ASEAN/Middle East footprint came from a Nigerian outlet Proshare. It noted that the news implies “that about 38% of global trade could bypass the US dollar dominated SWIFT network.”

In order for it to reach 38%, not only would all the central banks in each of these countries have to be connected to mBridge, but so would all their commercial banks. Judging by the slow and gradual adoption of mBridge by Chinese banks, today that 38% is extremely theoretical. That’s not to say it couldn’t be a substantial figure in a few years.

Additionally, in order to reach 38%, all the countries would have to shift 100% of cross border payments to local currencies. Today a large proportion of trade is denominated in dollars.

There’s a good reason for that.

For virtually every country in the world, their optimal foreign exchange rate with the narrowest margin is against the dollar. That’s because having a single intermediate currency means there are a lot more buyers and sellers for that exchange rate. By contrast, if you look at every cross currency exchange rate, for 180 global currencies there are 16,110 cross currency rates, most of which are thinly traded, making them expensive.

If a trader chooses to invoice in their local currency or the currency of their customer, one or both of them will have to suffer the cost of a suboptimal exchange rate.

So even if the government thinks local currency is desirable, the cost of choosing the trading currency falls on merchants, who usually want to save money, so they choose dollars.

No reliable source for the announcement

We prefer to go back to the original source of news. We monitor Chinese language news daily, specifically on digital payments, and had not come across this ASEAN/Middle East report. Two or three times a week we see announcements about various Chinese banks making different types of mBridge transactions for the first time.

We found at least two Chinese language articles about this ASEAN report that pre-dated the Proshare article. However, they were from smaller outlets and one of the posts is now inaccessible. The other one controversially mentions Iran as a participant. A major Chinese news outlet, Sina, ran an article about the ASEAN and Middle Eastern links in the last couple of days, but that has also been taken down.

There was reference to an original Chinese news story that was allegedly published on 17 March 2025, which happened to coincide with a People’s Bank of China visit by Hank Paulson, the former US Secretary of the Treasury under George W Bush.

There are two possibilities: the news is true, but was taken down because of sensitivities regarding US tariffs. Or the news is false and sites were instructed to take it down for that reason.

mBridge, the cross border payment solution

In 2023 we wrote about mBridge and the coming cross border payments fragmentation. The solution launched as a minimum viable product in June 2024. A few months later, rumors circulated that the Bank for International Settlements (BIS), the central bank of central banks, was thinking of withdrawing because a sanctioned country might get involved. At the time, Russia regularly mentioned the similar sounding BRICS Bridge.

In November 2024, the BIS stepped away from its mBridge involvement, saying the project had graduated. During his talk about the handover, BIS General Manager Agustín Carstens said that the BIS could not be involved with sanctioned countries, and that mBridge was never designed to cater to BRICS, but was intended as a broader public good.

As we noted earlier, at that stage there was one ASEAN mBridge member, Thailand, and four ASEAN observers: Cambodia, Indonesia, Malaysia and the Philippines, giving a total of five (rather than the ten reported). There were already two Middle Eastern members, the UAE and the newly joined Saudi Arabia. Plus there were four Middle Eastern observers: Bahrain, Egypt, Jordan and Turkey. At that stage there was no mention of Qatar or Iran which are allegedly currently participating.

There’s also a big difference between being an observer and becoming a member. For those that become members, first the central bank has to perform some integration and then commercial banks have to integrate as well.

It’s extremely unlikely that in five months mBridge has gone from one active ASEAN country to ten and from two active Middle eastern ones to six. Hence, the report is most likely false.

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Key Takeaways

• Ripple CEO Brad Garlinghouse suggests Bitcoin could reach $200,000 due to US crypto-friendly policies.
• Ripple is settling its SEC litigation for $50 million, facilitating their growth and acquisitions.

Ripple CEO Brad Garlinghouse said Bitcoin’s $200,000 price target is achievable as institutional interest rises and US regulators shift toward a more crypto-friendly approach.

“I think $200,00 is not unreasonable,” said Garlinghouse when asked about his Bitcoin price target during an interview with Fox Business Network’s The Claman Countdown on Friday. “I wouldn’t predict XRP. It’s too close to home.”

CoinGecko data shows Bitcoin at approximately $83,500, reflecting a 3% increase over the past day. However, the leading digital asset is still 23% lower than its peak value reached on January 20.

Garlinghouse said that he avoids short-term Bitcoin predictions and is focused on long-term macro trends. The CEO of Ripple is confident that macro tailwinds and the reversal of US regulatory hostility will continue to drive value in the crypto space.

“I think about what are the macro trends playing out for the crypto industry, for the XRP ecosystem,” said Garlinghouse. “XRP has been the best-performing major crypto in the last 90 days. We think about it as, what does that look like over the next three years? I’m very optimistic.”

Garlinghouse believes people are underestimating the impact of the US economy on the crypto market. He noted that the economic powerhouse has transitioned from “headwinds, hostility” to “tailwinds,” yet the market hasn’t fully grasped the positive impact of this regulatory shift.

“The largest asset managers in the world go from relatively frozen out or hostile to now a friendly market. This has sensible regulation that is thinking about pro-innovation here at home,” he said.

Garlinghouse agrees that crypto acts as a hedge against inflation and global currency instability, though short-term movements are volatile.

“The long-term value here is going to be very clear. It (crypto) is a hedge against inflation. It is a dynamic where the more utility we drive in the crypto markets, the more we’re going to see value accrete to that market,” he said.

ETFs as a safer, institutionalized gateway into crypto markets

This week, Teucrium launched the 2x Long Daily XRP ETF, the first-ever leveraged XRP ETF in the US. The product saw debut trading volume of $5 million, placing it in the top 5% of all new ETF launches.

On the spot ETF market, multiple applications for XRP ETFs have been filed in the US, though none have been approved yet. Garlinghouse said an XRP ETF would represent a safer, more institutional gateway into the crypto market.

He previously predicted that XRP ETFs would debut in the second half of this year. JPMorgan and Standard Chartered estimate XRP ETFs could attract $8 billion in inflows in the first year if they are approved.

Discussing Ripple’s recent $1.25 billion acquisition of Hidden Road, Garlinghouse said the firm would not have made the deal a year ago due to hostile regulatory conditions under the Biden administration.

The move comes as the company expands its workforce to approximately 1,100 employees. He said the acquisition could enable Wall Street giants to access crypto via traditional infrastructure, according to him.

“This allows even larger institutions like BlackRock, like the biggest Wall Street financial institutions, to come into this market in a way they understand with a safer prime broker to help clear transactions and a bigger balance sheet to do that. It’s good for the whole industry,” he said.

Under Trump, Ripple has seen a clear policy shift favoring crypto innovation. Garlinghouse credited David Sacks, Scott Bessent, and newly confirmed SEC chair Paul Atkins for creating a more crypto-friendly regulatory environment.

Garlinghouse noted that stablecoin legislation and market structure bills have gained momentum in Capitol Hill. He expects federal stablecoin legislation and market structure reform to pass soon, helping firms like Ripple, Circle, and Tether.

Launched under a New York trust license, Ripple’s RLUSD stablecoin has exceeded $250 million in market cap and is approaching $300 million.

 

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