Rehypothecation

Rehypothecation is a process where banks, brokers, exchanges, and other financial service providers utilize client assets for their own purposes to benefit both parties. For instance, certain blockchain enterprises employ a portion of their clients’ cryptocurrency holdings as collateral for lending to institutional investors. As a result, users receive incentivized rewards for keeping their assets on the platform. Companies within the blockchain industry that employ this practice include Binance, Huobi, Crypto.com, Celsius Network, and BlockFi.