TLDR
- First Abu Dhabi Bank (FAB) partners with Libre Capital for blockchain-based loans with tokenized assets as collateral
- Libre has issued about $150 million in tokenized versions of major investment funds
- The pilot program allows approved lenders to use RWA tokens as collateral for stablecoin loans
- Project works across multiple blockchain networks including Ethereum, Polygon and Solana
- The initiative is part of Libre’s “Project HODL” for optimized decentralized liquidity
First Abu Dhabi Bank (FAB), a leading financial institution with assets of $335 billion, entered into a partnership with Libre Capital to launch a blockchain-based lending program use digital tokens as collateral. The collaboration was formalized through a Memorandum of Understanding (MoU) signed in the United Arab Emirates.
The new initiative allows approved lenders to use Real World Asset (RWA) tokens as collateral for stablecoin loans. These tokens represent digitized versions of traditional investment products, including funds from established companies such as Brevan Howard, Hamilton Lane and BlackRock.
Libre Capital, which started in March 2024, has already issued about $150 million worth of tokenized assets. These include various investment vehicles, such as Brevan Howard funds, Hamilton Lane’s fixed-income products, and a BlackRock money market fund.
The program operates across multiple blockchain networks, demonstrating its broad technological reach. These networks include Ethereum, Polygon, Solana, NEAR, Aptos, and Coinbase’s layer-2 network BASE, which provides flexibility and accessibility to users.
The initiative falls under Libre’s “Project HODL”, which stands for High-Yield Optimized Decentralized Liquidity. This project aims to create new utilities for assets under management through collateralized loan mechanisms.
Dr. Avtar Sehra, founder and CEO of Libre, explains the technical aspects of the program.
“We have been working to add the utility to our AUM in the form of secured loans,” he said. “It’s an on-chain infrastructure that allows these RWAs to be used as collateral.”
The loan process works exclusively in stablecoins instead of traditional fiat currency. This approach aligns with the digital nature of the platform and provides a streamlined process for transactions.
Libre Capital brings strong backing to the project, with backing from Brevan Howard’s WebN Group and Nomura’s Laser Digital. These established financial institutions provide additional credibility to the initiative.
The company has already shown its commitment to expanding the use of RWA tokens. In September 2024, Libre proposed to use its blue-chip RWA tokens as collateral on the MakerDAO forum, demonstrating their broader vision for the technology.
FAB’s commitment represents a major step forward for the adoption of digital asset lending in traditional banks. As one of the largest banks in the Middle East, their participation could affect other financial institutions in the region.
Sameh Al Qubaisi, group head of global markets at FAB, emphasized the bank’s commitment to innovation through this initiative. The program includes automated processes designed to ensure proper risk management and regulatory compliance.
The partnership creates new opportunities for holders of crypto assets who want to use their tokens as collateral. This practice has become increasingly popular in the cryptocurrency space, and FAB’s involvement brings traditional banking infrastructure to support it.
The technical implementation includes credit lines provided by existing lenders, such as broker dealers and Laser Digital. FAB’s role includes handling liquidity through lines of credit to Libre’s assets via various blockchain networks.
The structure of the program maintains regulatory compliance while introducing innovative lending practices. This balance between innovation and security reflects the careful approach required in financial technology development.
The latest development in this initiative is the formal signing of the MoU, which sets the stage for the pilot program to begin operations. FAB will begin offering lines of credit to approved lenders that can use Libre’s tokenized assets as collateral.
