Securities Lending

Definition ∞ Securities lending is the practice of temporarily transferring securities from one party to another, typically in exchange for collateral and a fee. The borrower uses the securities for purposes such as short selling or arbitrage, with an agreement to return them at a later date. This activity facilitates market liquidity and various trading strategies.
Context ∞ In the digital asset space, securities lending is gaining traction as crypto assets are increasingly treated as financial instruments. Platforms offer services allowing users to lend their cryptocurrencies for yield, or borrow them for trading strategies. Regulatory bodies are examining how existing securities lending rules apply to digital assets, impacting compliance and market practices in decentralized finance.