Risk Management Framework

Risk Management

Risk management is at the core of BridgingFi’s design. Operating across traditional secured lending and blockchain-based asset tokenization means we must manage two distinct but interconnected risk domains: off-chain real-world asset risk and on-chain digital asset risk. Our framework is multi-layered, proactive, and verifiable.

1. Off-chain: Real-World Asset Risk Controls

a) Conservative Loan Structures

  • UK bridging loans secured against real estate with low loan-to-value (LTV) ratios (typically 50–70%).

  • Short maturities (6–18 months) limit exposure to long-term market volatility.

b) Partner-Led Underwriting & Compliance

  • Vector Capital provides institutional-grade loan origination, due diligence, and compliance oversight.

  • Every borrower and property undergoes KYC/AML, credit checks, and valuation by certified surveyors.

c) Legal Enforceability

  • Enden Solicitors ensures every loan agreement and property charge is legally enforceable under UK law.

  • In case of default, SPVs have the legal right to repossess and liquidate collateral.

d) Independent Auditing

  • UK-based chartered accountants audit the loan book, collateral valuations, and cash flows regularly.

  • Audited reports are available to investors, ensuring full transparency.

2. On-chain: Digital Asset & Protocol Risk Controls

a) Non-custodial BTC Vaults

  • Investors maintain full ownership of BTC; assets are locked in multi-signature or smart contract-controlled vaults.

  • BridgingFi cannot unilaterally move investor funds.

b) Smart Contract Security

  • Leading Web3 security partners conduct formal code audits, penetration testing, and ongoing monitoring.

  • Critical functions are subject to multi-sig approvals and timelocks to prevent malicious execution.

c) AML/KYC Integration

  • Tokenized assets can be wrapped in compliance layers, ensuring regulatory readiness for institutional onboarding.

3. Market & Liquidity Risk Controls

  • Loan maturities are staggered to maintain regular cash inflow for investor yield payments.

  • GBP liquidity is diversified between platform capital and partner bank facilities, reducing dependency on a single source.

  • Secondary market plans will allow investors to trade RWA tokens/NFTs for liquidity before maturity.

4. Governance & Oversight

  • All risk policies are documented and reviewed quarterly.

  • Key risk events trigger automatic reporting to compliance and audit partners.

  • BridgingFi’s internal risk committee includes representatives from legal, compliance, and technical security teams.

The BridgingFi Risk Advantage

By combining:

  • Institutional-grade real-world underwriting (Vector Capital)

  • Specialist legal enforcement (Enden Solicitors)

  • Blockchain-native security (Web3 audit partners)

  • Independent financial verification (UK chartered accountants)

BridgingFi delivers a full-spectrum risk management framework—ensuring that every BTC-Fi product is both secure and resilient, from property collateral in the UK to on-chain yield distribution.

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