Get Clear Answers About Digital Asset Lending

FAQ

Obsidian provides institutional-style digital asset lending for borrowers seeking liquidity without an immediate sale of their crypto holdings.

This FAQ explains how collateral, custody, margin calls, tranching, repayment, and enforcement work so borrowers can understand the structure clearly before moving into documentation.

This product is designed for borrowers seeking institutional-style financing against digital assets. Each transaction is reviewed individually based on the borrower, the collateral, the size of the request, and the proposed structure.

Support depends on the asset, liquidity profile, market depth, and overall transaction structure. Bitcoin is a common form of collateral, and other digital assets may be considered on a case-by-case basis.

Once collateral is pledged, it moves into the family office's custody and control framework as defined in the master loan agreement. The borrower no longer has unilateral control of the assets, but retains the contractual rights and protections set out in the loan documents.

No. We do not trade borrower collateral or use it for yield. The loan does not rely on speculative use of borrower assets, and any permitted use is governed by the agreement and does not impair the borrower’s contractual rights.

During the loan term, collateral is held within the family office’s custody and control framework as defined in the agreement. The lender has the rights needed to administer and enforce the loan, while the borrower’s rights remain defined by contract.

Collateral is moved into an institutional custody and control structure tied to the loan documentation. The purpose of that structure is to support enforceability, operational control, and orderly administration of the loan while keeping the borrower’s rights defined by contract.

Loans can be funded in digital dollars or fiat, depending on the agreed transaction setup and the borrower’s needs. Final funding mechanics are confirmed during documentation and closing.

A loan may be funded in one or more tranches. Each tranche is documented separately and can carry its own collateral amount, pricing reference, trigger thresholds, and maturity profile within the broader lending framework.

Absolutely. A borrower may begin with a smaller tranche and add additional drawdowns later, subject to lender approval, collateral support, and the agreed structure at that time.

At maturity, the borrower repays the obligations due under the agreement and the pledged collateral is returned in accordance with the loan documents. Timing and mechanics are handled through the repayment process defined for each transaction.

Prepayment rights depend on the structure agreed at closing. Some loans may include no-prepayment periods or other agreed limitations, so early repayment should be understood from the signed documents rather than assumed.

The loan documents are governed by New York law.

Disputes are resolved by ICDR arbitration seated in Nevada, in English, as provided in the agreement.

No. There is no automated liquidation mechanism. Margin thresholds are monitored, and margin calls may be issued when collateral values approach those levels. Liquidation rights arise only after an uncured default and are exercised under the agreement.

A margin call is a warning event, not a liquidation event. It signals that collateral values have moved toward a predefined threshold and that the borrower may need to decide how to respond under the terms of the agreement.

The agreement defines the borrower’s rights and the lender’s remedies. In practice, additional support or other adjustments may be considered before default depending on the structure and circumstances, but anything beyond the contract is discretionary and should not be assumed.

The agreement permits enforcement following an uncured default, and in some cases notice ,such as a catastrophic default, may be limited or not required. Communication should occur whenever feasible, but enforcement rights do not depend on prior notice.

Trigger levels are defined as percentages of the collateral value at closing, not as floating market-based LTV bands. In economic terms, forced liquidation typically occurs only once the position is already above 100% LTV.

Rapid market moves are a recognized risk. The structure includes predefined triggers and cure windows designed to avoid reflexive action during short-lived dislocations, but extreme conditions can compress available responses and outcomes still depend on market liquidity and the duration of the move.

Failure to satisfy a margin call within the contractual timeframe constitutes an Ordinary Default. At that point, the lender may exercise its enforcement rights under the agreement. In practice, we try to be as flexible as possible. Just talk to us so we can come up with a plan.

Never. Trigger levels and structural parameters are fixed at closing and do not reprice during the term unless amended in writing.

No. DeFi liquidations are typically automatic and immediate. JTSA loans are bilateral agreements with defined thresholds, cure windows, and lender enforcement rights, so execution is not purely programmatic.

Loans are non-recourse. Recovery is limited to the pledged collateral for the specific tranche, as defined in the agreement.

Only before default, and only at the lender’s discretion. Otherwise, tranches are treated independently, with their own collateral, trigger thresholds, and maturity dates.

The model does not rely on trading borrower collateral. Economics are established through the loan structure, contractual trigger design, management fees covering risk management and execution costs, and the agreed loan terms at closing.

Pricing reflects each lender’s structure, risk framework, cost base, and transaction design. Our pricing is determined by the agreed loan structure and collateral profile rather than by speculative use of borrower assets.

Liquidation is a contractual outcome, not a penalty. Economic results are defined by the structure agreed at closing and by execution under market conditions, not by speculative use of borrower collateral.

Collateral and proceeds are applied according to the priority set out in the agreement, including fees, interest, and principal. Any remaining balance or obligation is governed by the contract.

Borrowers should expect a standard onboarding and diligence process appropriate to the structure, parties, and jurisdiction involved. Exact requirements depend on the transaction, but the process is intended to confirm identity, authority, and compliance before closing. It is generally quick and painless, thanks to Sumsub.

The borrower structure is determined during onboarding and documentation. Entity choice, signing authority, and compliance requirements are reviewed as part of the transaction setup.

Sometimes. Borrowers can discuss more conservative structures if they want greater downside tolerance. Final terms are set at closing and reflected in the applicable documentation.

Any future borrowing or restructuring would be subject to lender approval and the conditions at that time. Additional financing is not automatic, but may be considered based on the borrower’s situation and collateral profile. For instance, a Bitcoin-backed loan for which the collateral doubled in value since closing may be approved for a second drawdown, bringing the LTV back to its original percentage.

Each transaction is reviewed individually based on the borrower, the collateral, and the proposed structure. Final rights, obligations, triggers, and remedies are set by the signed loan documents, so this FAQ is intended as a practical overview rather than a substitute for the agreement.

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Obsidian is not a money transmitter, broker‑dealer, exchange or custodian. Our services are exclusively institutional.