Newmarket Capital recently closed the first investment deal for its groundbreaking Battery Finance loan strategy, allowing borrowers to integrate bitcoin into long-term financing arrangements as collateral. Let's delve into the details of this innovative financial approach.
Newmarket Capital's Investment Deal for Bank Street Court Apartment
On November 7, 2024, Newmarket Capital, a reputable institutional capital manager and Registered Investment Adviser, finalized a refinancing deal for the Bank Street Court apartment located in Old City, Philadelphia, PA. The financing was backed by both the property itself and approximately 20 bitcoin.
Exciting Developments and Symbolism
Newmarket Capital's CEO, Andrew Hohns, expressed enthusiasm not only for implementing the company's new strategy but also for the symbolic significance of the deal. Hohns highlighted the historical importance of the location, stating, "It's a building that is located less than half a block away from the first bank of the United States." This strategic move aligns with Philadelphia's legacy of innovation and pioneering achievements.
Understanding the Battery Finance Strategy
Battery Finance allows bitcoin to serve as 10% to 30% of the collateral for loans alongside traditional assets. By collaborating with Ten 31, Newmarket Capital established Battery Finance as a majority-owned subsidiary, facilitating the integration of bitcoin into financing structures. Unlike conventional lending practices that pose liquidation risks if bitcoin's value drops below a specified threshold, Newmarket Capital offers risk-free loan structures without mark-to-market triggers.
Structuring Loan Deals
Loan arrangements utilizing the Battery Finance strategy can vary. Borrowers can either pledge existing bitcoin holdings as collateral or opt for Newmarket Capital and the borrower jointly purchasing bitcoin as part of the loan structure. The latter approach was employed in the financing of the Bank Street Court building, where a $12.5 million loan was offered for a $16.5 million property. With the loan proceeds, the borrower settled existing financing, allocated funds for property improvements, and acquired nearly twenty bitcoin as part of the collateral package.
Flexible Loan Terms and Unique Features
Unlike traditional loans that impose prepayment penalties, the Bank Street Court financing allows early repayment without penalties. Borrowers and lenders mutually benefit from bitcoin appreciation during the loan term, fostering a long-term perspective on bitcoin's potential. The loan carries a favorable interest rate, a 10-year maturity, and aligns with bitcoin's four-year cycle for potential liquidation.
Empowering Bitcoiners and Realizing Financial Goals
Newmarket Capital's Battery Finance strategy caters to borrowers seeking to acquire or refinance commercial properties. Targeting loans ranging from $10 million to $30 million, with bitcoin comprising 10% to 30% of the collateral, this approach appeals to asset owners looking to diversify into bitcoin and Bitcoiners aiming to leverage their digital assets for real-world investments. By bridging the gap between bitcoin holdings and traditional financing, borrowers can pursue their goals while remaining invested in bitcoin.
Future Prospects and Expansion
Battery Finance aims to extend its services to a broader customer base, catering to individuals at various stages of their Bitcoin investment journey. The goal is to offer innovative financial solutions that empower individuals to finance significant purchases, such as homes or vehicles, using their bitcoin holdings.
Frequently Asked Questions
How does an IRA for gold and/or silver work?
You can invest in precious metals like gold and silver without having to pay taxes. They make a great investment choice for those looking to diversify.
If you are over 59 1/2, income tax is not due on the interest earned from these accounts. Any appreciation in the account's worth does not attract capital gains tax. You have to limit the amount you can deposit into this type account. Minimum amount allowed is $10,000 If you're under the age of 59 1/2, investing is not allowed. The maximum annual contribution is $5,500.
Your beneficiaries could receive less if you die before your retirement. After paying all expenses, your assets must be sufficient to cover the remaining balance in your account.
Some banks offer a silver and gold IRA option. Others require you open a regular broker account, through which shares or certificates can be purchased.
Are precious metal IRAs a good investment?
How willing you are to risk your IRA account losing value will decide the answer. If you have $10,000 cash, they make sense as long as you don’t expect your IRA account to grow rapidly. They may not be the best investment option for you if your goal is to save money over many decades and to invest in assets with a high likelihood of increasing in value (gold). These investments can also be subject to fees that could reduce any gains.
What is the most valuable precious metal?
An investment in gold can yield high returns on its capital. It protects against inflation as well as other risks. As inflation worries increase, gold prices tend to rise.
It is a smart idea to buy gold futures. These contracts will guarantee that you will receive a specific amount of gold at an agreed price.
However, gold futures aren't suitable for everyone. Some prefer to have physical gold.
They can trade their precious metals with others. They can also sell it whenever they want.
Some people also prefer to avoid paying taxes on their gold. To avoid paying taxes on their gold, they purchase it directly from the government.
This will require you to make multiple trips to your local postal office. You will first need to convert any existing gold in coins or bars.
Then you will need a stamp to attach the coins or bars. Then, send them to the US Mint. They will then melt down the bars and coins to create new coins.
These new coins and bars are stamped with the original stamps. They are therefore legal tender.
If you buy gold from the US Mint directly, you won’t have to pay tax.
So, which precious metal would you like to invest in?
Is it a good idea to open a Precious Metal IRA
The answer depends on whether you have an investment goal and how much risk tolerance you are willing to take.
Register now if you want to save money for retirement.
The reason is that precious metals are likely to appreciate over time. They also offer diversification benefits.
The prices of silver and gold tend to be linked. They are therefore a better option for investing in both assets.
You shouldn't invest precious metal IRAs if you don't plan on retiring or aren't willing to take risks.
How do I choose the right IRA for me?
The first step to finding an IRA for you is understanding your account type. This is whether you want a Roth IRA, a traditional IRA, or both. You should also know how much money your have available to invest.
Next is deciding which provider best suits your needs. Some providers offer both accounts and others only specialize in one.
Finally, you should consider the fees associated with each option. There may be annual maintenance fees, as well as other fees. Fees for each provider can vary widely. One example is that some providers charge a monthly subscription based upon the number of shares you hold. Others only charge once per quarter.
Statistics
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal so that you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (sltrib.com)
- Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. (forbes.com)
External Links
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en.wikipedia.org
investopedia.com
wsj.com
How To
How to start buying silver with your IRA
How to buy silver with an IRA – Direct ownership of physical bullion is the best way to invest. The most popular investment form is silver bars and coins. This is because it offers diversification and liquidity.
There are several options for buying precious metals, such as silver and gold. You can purchase them directly from their producers, such as mining companies and refiners. You can also purchase them through a dealer, who buys and sellers bullion products, if you don’t want to deal directly with the producer.
This article will help you to start investing silver with your IRA.
- Investing directly in Gold & Silver – This is your first choice for buying precious metals. This allows you to get the bullion directly and have it delivered directly to your home. While some investors prefer to keep their bullion inside their homes, others choose to store it in a storage facility that is insured and protected. You should ensure that your precious metal is properly stored when you are preserving it. Most storage facilities offer insurance coverage that protects against theft, fire, or damage. However, even with insurance you could lose your investments due to natural catastrophes or human error. It is always a good idea to store precious metals in safe deposit boxes at banks or credit unions.
- Online Precious Metals Purchase – You can buy bullion online if you want to avoid having precious metals in heavy boxes. Bullion dealers have a wide range of bullion options, including bars and coins. Coins are available in a variety of sizes, shapes, designs, and colors. Coins are generally easier to transport than bars and more affordable. Bars come in different weights and sizes. Some bars can weigh hundreds of grams, while others are only a few ounces. A good rule of thumb when selecting which type of bar you should get is to look at what you plan to use it for. If you plan on giving it as gifts, you might choose something smaller. If you are looking to add it as a gift, or to proudly display it, you may want to spend a bit more and buy something larger.
- Precious Metals From Dealers – A third option to buying bullion is from a dealer. Most dealers only specialize in one type of market, either silver or gold. Some dealers specialize exclusively in certain types or bullion, like rounds or minted money. Others may specialize in specific areas. Others are specialists in bulk purchases. You will be able to find competitive prices and simple payment options no matter who dealer you choose.
- Purchase Precious Metals via Retirement Accounts – Although this is technically not an investment, it can be used as a way to increase exposure to precious materials. Investments in precious metals must be made through a qualified retirement plan to receive tax benefits as per Section 219 of IRS Code. These accounts include IRAs. These accounts are designed to help you save for retirement and often provide higher returns than other investment vehicles. These accounts also allow you to diversify across multiple metals. The problem? Retirement accounts don't allow everyone to invest. These accounts can only, however, be accessed by those who work for an employer that sponsors them.
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By: Frank Corva
Title: Newmarket Capital's Innovative Battery Finance Strategy Utilizing Bitcoin Collateral
Sourced From: bitcoinmagazine.com/business/newmarket-capital-launches-battery-finance-bitcoin-collateralized-loan-strategy-
Published Date: Mon, 25 Nov 2024 14:15:42 GMT
