Galaxy Digital Secures Loan with Historic Violin NFT

Galaxy Digital uses historic violin NFT to secure a loan; the violin once belonged to Russian Empress Catherine II, also known as Catherine the Great.

Yat Siu, co-founder of Animoca Brands and Galaxy Digital, an organization led by Michael Novogratz, has tokenized a 1708 Stradivarius violin to secure a loan in the millions of dollars.

Siu reportedly loaned Galaxy an undisclosed sum of money on June 4, collateralizing the loan with the 316-year-old violin that Siu possessed. The digital assets company converted the violin into a nonfungible token (NFT) and will retain the instrument’s physical and NFT versions until Siu repays the loan.

Although Galaxy and Siu did not disclose the loan amount, they estimated it to be “in the millions.” The violin will be in the custody of a custodian based in Hong Kong until Siu and Galaxy approve its release.

300-year-old Stradivarius violin

Catherine the Great, the former Russian Empress, was the former violin owner. A musical instrument auction agency, Tarisio, claims to have recorded the violin’s provenance and can trace its origins over three centuries.

According to Tarisio, the Russian ambassador to Venice acquired the violin on behalf of Empress Elisabeth Petrovna, who ruled the Russian Empire between 1741 and 1762.

Upon her demise, the violin was bequeathed to her successor, Catherine II, more commonly called Catherine the Great.

Siu purchased the violin at auction for over $9 million a year ago.

Tokenizing assets in lending

According to Galaxy’s vice president of tokenization, Thomas Cowan, the capability to tokenize corporeal assets could alter the crypto lending landscape. Collaterals associated with crypto assets are typically quite substantial due to the volatility of digital assets.

In an interview with Bloomberg, Cowan stated that the capacity to lend to clients is increased through tokenizing physical assets, even compared to volatile assets such as Bitcoin or Ether. Although it may be a violin, the executive foresees that it could eventually encompass real estate.

NFT sales tumble in May

In contrast to utilizing NFTs in physical asset tokenization, digital collectibles experienced a decline in revenue. According to data tracker CryptoSlam, NFT sales volume decreased by 54% in May.

NFTs generated a sales volume exceeding $1 billion in April 2024, whereas in May 2024, the figure dropped to $624 million. The sales of the leading NFT blockchains, Bitcoin, Ethereum, and Solana decreased significantly.