Blockstream Corp. has secured a multi-billion-dollar investment to launch three institutional funds, including two focused on Bitcoin-backed lending.
The Canadian blockchain technology firm confirmed the move on March 4 in a statement on X, aligning with a Bloomberg report on the investment. The announcement comes amid a resurgence in Bitcoin prices and a growing demand for crypto-native financial solutions.
The new funds are scheduled to go live on April 1, offering Bitcoin-backed loans and crypto borrowing with U.S. dollars as collateral. Institutional investors will be able to participate starting July 1. “With institutional demand for Bitcoin-native finance growing, we’re building the foundation for a more robust and transparent lending ecosystem,” Blockstream stated.
Bitcoin Lending Revival and Institutional Demand
The investment highlights renewed confidence in crypto lending, which had declined sharply following the collapse of Sam Bankman-Fried’s FTX in late 2022. The bankruptcy of major lenders such as Genesis Global Capital and BlockFi created a liquidity vacuum, prompting a shift in the market. However, a surge in Bitcoin prices and a pro-crypto stance from the White House have contributed to a renewed interest in digital asset lending.
Blockstream’s investment products will include Bitcoin-backed lending and USD-collateralized borrowing, allowing institutions to unlock liquidity without selling Bitcoin. A third fund will focus on hedge fund strategies, providing exposure to Bitcoin markets. “Blockstream’s institutional-grade Bitcoin investment solutions will go live on April 1, with external capital acceptance opening on July 1,” the firm stated.
Institutional-Grade Funds and Market Strategy
Blockstream introduced its asset management business in January with the launch of the Blockstream Income Fund and Blockstream Alpha Fund. The Income Fund facilitates loans ranging from $100,000 to $5 million, while the Alpha Fund is geared towards portfolio growth through revenue streams like Lightning Network node operations.
The firm, known for developing the Liquid Network—a Bitcoin sidechain for faster transactions—secured $210 million in financing via convertible notes in October. It now joins firms such as Grayscale, Pantera, Galaxy Digital, and Crypto.com in offering crypto-focused investment vehicles tailored to institutional investors.
Other financial entities are also increasing their exposure to Bitcoin lending. Cantor Fitzgerald LP, a financial services firm formerly led by U.S. Commerce Secretary Howard Lutnick, is collaborating with stablecoin issuer Tether on a multi-billion-dollar Bitcoin lending initiative. As Bitcoin gains traction among institutional investors, firms are positioning themselves to meet the demand for liquidity solutions and strategic market exposure.
Regulatory Climate and Future Implications
The broader crypto lending sector has faced increased scrutiny from regulators following the industrywide meltdown caused by FTX’s collapse. However, the Securities and Exchange Commission has recently paused or dismissed multiple lawsuits against crypto firms, signaling a potential shift in oversight under the current administration.
Blockstream CEO Adam Back has been vocal in his support for Bitcoin while criticizing certain regulatory proposals. He recently dismissed President Donald Trump’s strategic crypto reserve plan, arguing that it included lesser-known tokens alongside Bitcoin. Trump’s announcement, which proposed the inclusion of Bitcoin, Ether, XRP, Solana, and Cardano, sparked widespread debate in the crypto community.
