Trump’s Crypto Endorsement Sparks Resurgence in Crypto Microloans

Microlending meets blockchain—again. With former President Trump throwing his weight behind digital assets, crypto-backed microloans are staging a comeback. No banks, no paperwork—just decentralized leverage for the underbanked. Or the overleveraged.

How it works: Borrowers stake crypto as collateral, lenders earn yield. Default? The smart contract liquidates—no mercy, no bailouts. It’s DeFi’s answer to payday loans, minus the storefronts.

The irony? Traditional finance still scoffs at crypto volatility… while offering negative-yield bonds. Priorities.

Crypto credit startups embrace programmable trust and AI

Divine isn’t alone. 3Jane, a crypto credit startup backed by Paradigm (an early FTX investor), recently raised $5.2 million in seed funding. It offers unsecured USDC credit lines via Ethereum smart contracts, though it requires “verifiable proofs” of financial standing — such as bank statements or crypto holdings — rather than collateral.

The firm sells defaulted loans to US debt collectors and is working on AI-powered agents that obey debt covenants automatically, potentially allowing lower interest rates.

Meanwhile, Wildcat, another rising protocol, caters to market makers and crypto trading firms by offering customized, undercollateralized credit facilities. Over $170 million has already been lent through its Ethereum-based platform. Like competitors Clearpool and TrueFi, Wildcat allows borrowers to define terms like maturity and loan caps, while lenders self-organize in case of default.

“We’re seeing a shift toward programmable trust,” said Evgeny Gaevoy, Wildcat adviser and Wintermute CEO. “In the absence of collateral, reputation and transparency become everything.”

Wall Street, AI, and biometrics fuel high-stakes reboot of crypto lending

The crypto lending revival comes as Bitcoin prices hit new highs and traditional finance warms to digital assets. Cantor Fitzgerald recently launched a $2 billion “Bitcoin Financing Business”, and JPMorgan is reportedly exploring crypto-backed loans.

Even Coinbase is experimenting with AI agents embedded with crypto wallets, developed in collaboration with Altman’s OpenAI, that could one day autonomously manage loans and repayments.

Still, memories of the 2022 crypto lending crash — marked by the collapses of Celsius and Genesis — loom large. Celsius’s CEO, Alex Mashinsky, is serving 12 years for fraud, while Genesis agreed to a $2 billion settlement in a lawsuit over defrauding 230,000 investors.

Despite those risks, startups like Divine are betting that biometrics, blockchain, and AI can reboot crypto credit models for a new era where loans aren’t backed by assets, but by identity, algorithmic enforcement, and yield-seeking investors.

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