Image credit: Galaxy Gives

Disclaimer: This story was originally published on June 4, 2024.

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Galaxy Digital Holdings, Michael Novogratz’s digital asset merchant banking institution, and Web3 company Animoca Brands, through GK8, have tokenized a 1708 Stradivarius violin as collateral against a multi-million dollar loan.

Galaxy lent the undisclosed amount of funds to Animoca Brands co-founder Yat Siu, who bought the $9 million instrument once owned by Russian Empress Catherine the Great last year, Bloomberg reported on June 4.

Galaxy and Siu refrained from disclosing specific details regarding the loan amount or terms, stating that the value was “in the millions.”

According to the report, Galaxy will hold both the physical and non-fungible token (NFT) version of the violin itself as collateral. The agreement designated a custodian in Hong Kong to safeguard the instrument, and its removal from the jurisdiction would require approval from both parties.

Siu reportedly said that he might use the funds to invest in art or new crypto-related projects.

“I was thinking about how we can create something special like this to have broader access,” Siu told Bloomberg. “As far as the loan against the violin, it was also a good way — although it wasn’t required — to get additional liquidity.”

The Animoca executive reportedly wants to enable shared ownership of the violin NFT through a fractionalization process. However, he concluded that there are no current plans or agreements to do so.

In an interview with Bloomberg, Thomas Cowan, Galaxy’s vice president of tokenization explained that tokenization of tangible assets opens up a new avenue for lending. He said it could offer larger loans against assets like fine art or musical instruments compared to volatile cryptocurrencies like Bitcoin (BTC) or Ethereum (ETH).