Galaxy Digital sees the tokenization of the musical instrument as a major progress in using blockchain technology to unlock the value of real-world assets.
Galaxy Digital, a prominent financial services company owned by Michael Novogratz, has tokenized an antique violin made in 1708 to use as collateral for a multimillion-dollar loan.
In a recent announcement, the company revealed it had lent an undisclosed amount of funds to Animoca Brands co-founder Yat Siu in exchange for the violin named Stradivarius.
The antique instrument, currently valued at around $9 million, was previously owned by Russian Empress Catherine the Great before Siu acquired it at an auction last year.
Siu and Galaxy Digital reached an agreement to turn the violin into a non-fungible token (NFT) and thereafter use it as collateral. Under this arrangement, both the physical violin and the NFT version will belong to Novogratz’s firm until Siu repays the loan.
Stradivarius to Be Held in Hong Kong
During the loan period, the Stradivarius will be held in Hong Kong. Galaxy Digital has designated an unnamed custodian in the country to hold the antique violin until both parties authorize its release.
According to Tarisio, a musical instrument auction house, the violin began its journey over 300 years ago when the Russian ambassador to Venice gifted it to Empress Elisabeth Petrovna.
The violin remained with her until her death in 1762, after which her successor, Catherine the Great, became its owner.
The violin has since changed hands multiple times until Siu acquired it in 2023. The Animoca Brands co-founder is the first owner to transform the musical instrument into an NFT with the help of Galaxy Digital.
Major Progress in Blockchain Technology
Galaxy Digital sees the tokenization of the musical instrument as a major progress in using blockchain technology to unlock the value of real-world assets (RWA).
“The tokenization of this iconic musical instrument, celebrated for its unmatched craftsmanship and storied provenance, marks a significant advancement in the application of blockchain technology to unlock the value of unique real-world assets,” Galaxy Digital said.
Thomas Cowan, vice president of tokenization at Galaxy Digital, said the company’s ability to tokenize physical items could transform the landscape of crypto lending. Typically, collateral for crypto assets is very high due to the volatility of digital currencies.
However, in a separate interview with Bloomberg, Cowan explained that by tokenizing physical assets, the company can offer more lending options to clients, even against highly volatile assets like Bitcoin (BTC) and Ethereum (ETH).
He believes that while today it is a violin, this concept could potentially be applied to real estate in the future.
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