Crypto billionaire Michael Novogratz's firm has tokenized a 316-year-old violin owned by Catherine the Great in order to back a loan

• Mike Novogratz's firm has tokenized an 18th-century violin as collateral against a loan, Galaxy said in a press release.
• Tokenizing the instrument is a way to boost liquidity, and make it more available to interested investors.
• The multimillion-dollar loan deal was reached with Animoca Brands co-founder Yat Siu.

The crypto-focused firm Galaxy Digital has tokenized an 18th-century violin, creating a blockchain version of the instrument to use as collateral for a multimillion loan, Bloomberg reported. 

According to a press release, the violin is a 1708 Stradivarius that was once owned by Russia's empress Catherine the Great, bought last year at auction by Animoca Brands co-founder Yat Siu and valued at over $9 million.

It is now in the care of Galaxy, which provided Siu a loan, and is using the violin to back it. In addition to this, the firm created a nonfungible token of the instrument, which is also meant as collateral.

"By starting with high-end assets like this violin, we're creating a process that will transform how a whole range of assets are managed, valued, and traded in a digital economy," Galaxy CEO Michael Novogratz said in the release release.

For the uninitiated, tokenization is an expanding practice, where traditional real-world assets are packaged as tokens to be traded on blockchain platforms. According to one estimate from late 2023, the total value of on-chain real-world assets has already breached $118 billion.

Making things digital means these assets benefit from boosted liquidity, and can be fractionalized — or divided up for more affordable trading. 

Speaking with Bloomberg, Siu indicated that tokenizing the violin was not a necessary step, but was a way of notching additional liquidity. He added that he is open to eventually fractionalizing the tokenized instrument, allowing investors to purchase a claim. However, there are no current plans to do so as of yet.

For Galaxy's part, offering such loans is a way of reaching a new clientele, which has gained from rising crypto markets, Bloomberg said. Otherwise, the firm already has a division providing loans.