Galaxy Digital Holdings LP, founded by billionaire Michael Novogratz, is expanding its loan business to new customer groups, marking a significant milestone in the company's growth. The latest transaction involves a multi-million dollar loan, with a violin once owned by Russian Empress Catherine II as collateral. The violin, a 1708 Stradivarius, was purchased by Yat Siu, co-founder of Animoca Brands, at an auction last year for an estimated $9 million.

Galaxy Digital lent the funds to Siu, who will hold a tokenized version of the instrument in the form of non-fungible tokens (NFTs), as well as the violin itself. The violin will be held in custody in Hong Kong, and both parties must sign an agreement to remove the violin. The loan amount is 'up to several million dollars', but the specific terms were not disclosed.

This transaction represents Galaxy Digital's initial efforts to attract different customer groups benefiting from the rise in cryptocurrency prices and the resulting wealth growth. The company's financial statements show that its average book loan size for the first quarter was $664 million, a 5% increase from three months ago. Thomas Cowan, Vice President of Galaxy's tokenization business, stated that tokenizing physical assets such as artworks or musical instruments 'allows us to provide more loans to customers than more volatile assets such as Bitcoin or Ethereum. Today it's a violin, tomorrow it could be real estate.'

Siu plans to use the loan proceeds to invest in new cryptocurrency-related projects or artworks. 'I'm thinking about how we can create something special that more people can use,' Siu said of the tokenization process. Regarding the violin collateral loan, he added, 'This is also a good way to get additional liquidity, although it is not necessary.' Galaxy tokenized the violin in collaboration with its subsidiary GK8 and Siu.

The tokenization of the violin allows for the creation of a digital representation of the asset, which can be traded and owned by others. Siu hopes to allow others to purchase ownership of the tokenized violin through 'splitting', but there are currently no plans to do so. This innovative approach to lending and asset management highlights the potential for blockchain technology to revolutionize the way we think about ownership and value.