Lending · Private Credit
Custody and Triparty Control
Neither party holds the collateral. That is the point.
The lending failures of the last cycle shared one feature: collateral held by the lender, freely re-used, and gone when it was needed. Wesvel facilities are built on the opposite principle. Collateral sits with an independent, regulated custodian in an account segregated to the facility, under an agreement that spells out who may instruct the custodian and under what conditions.
The control agreement
A three-way agreement between borrower, lender and custodian. It identifies the collateral account, restricts withdrawals to the conditions in the facility, and gives the lender the right to instruct the custodian, without borrower consent, once a default or liquidation event has occurred. Under modern commercial law, control of this kind is how a lender perfects its security interest in a digital asset.
Segregation
The collateral account holds this facility’s collateral and nothing else. It is not commingled with the custodian’s assets, the lender’s assets, or other borrowers’ collateral. In a custodian insolvency the account is identifiable and, subject to the custodian’s legal structure, outside the estate.
Who may move what
During the term, the borrower may add collateral freely and withdraw only with lender consent and only above the required ratio. The lender may instruct release only for a liquidation or on repayment. The custodian executes instructions against its own policy engine and records every one. Neither party can move collateral unilaterally in normal conditions.
No rehypothecation
Collateral is not lent, staked, posted or otherwise used by the lender. It sits in the account until it is released to the borrower on repayment or sold on liquidation. The facility earns its return from the interest on the loan, not from re-using the collateral.
Practice
How Wesvel approaches it
- 01Every facility has a segregated collateral account at an independent, regulated custodian and a signed control agreement.
- 02The lender’s instruction rights are conditional on documented default or liquidation events and are logged by the custodian.
- 03Collateral is never rehypothecated, staked or lent.
- 04Custodians pass the same diligence as any venue, including segregation, insurance, controls assurance and insolvency treatment.
More in Lending
- How a Facility WorksThe anatomy of a collateralized digital asset loan: borrower, collateral, custody, term and the controls between them.
- Collateral and Loan-to-ValueWhich assets qualify as collateral, how loan-to-value is set from their liquidity and volatility, and why the haircut is the whole loan.
- Margin Calls and LiquidationThe thresholds, cure periods and liquidation rules that protect a facility when collateral falls, and how they differ from on-chain liquidation.
- Documentation and RecourseThe facility agreement, security and control documents, and what a lender can and cannot do when things go wrong.
- Borrower Diligence and Use of ProceedsWho Wesvel lends to, what it asks before it does, and why the use of proceeds is part of the underwriting.
- Receivables FinancingAdvancing against accounts receivable, whether by purchase or by loan: eligibility, verification, dilution, concentration and collections.
- Private Credit FacilitiesSenior secured and unitranche facilities to operating companies: security, covenants, monitoring and the role of the sponsor.
- Warehouse Lines of CreditRevolving facilities to lenders and originators, secured on the loans they make: borrowing base, eligibility, bankruptcy-remote structure and takeout.
- Asset-Based LendingRevolving and term credit secured on inventory, equipment and mixed collateral pools, governed by a borrowing base and field examination.
- Structured and Other DebtBridge loans, revenue-based financing, participations, forward-flow agreements and structured notes: the products used where a term loan or a borrowing base is the wrong shape.
- Underwriting and ServicingThe credit process behind every non-digital facility: analysis, approval, documentation, monitoring, servicing and workout.
- Short-Duration Business CreditShort-duration revenue-based credit exposure to operating businesses, and how the mandate underwrites and sizes it.
- Equipment FinancingLoans and leases for vehicles, machinery, medical and technology equipment, secured on the equipment itself, plus sale-leaseback of assets a business already owns.