ZUG and SAN FRANCISCO, June 21, 2023— Arf, a global liquidity and settlement platform, and Huma Finance, who builds infrastructure for real-world lending, have announced a partnership to introduce the world's first-ever fully transparent on-chain liquidity solution for cross-border payments. The strategic partnership addresses the current liquidity challenges in the industry caused by lack of transparency.
Financial institutions require liquidity to achieve same-day cross-border settlements, but the amount they can borrow is limited based on the cash collateral they can provide. As a result, an astonishing $4 trillion is currently locked in pre-funded accounts, which is a massive but hidden cost to the overall global payments industry.
To remove the costly prefunding requirement and reduce the delays and counter-party risks, Arf offers short-term USDC-based working capital loans of 1-5 days to licensed financial institutions and helps them to settle cross-border payments immediately in USDC. Arf's solution helps to settle cross-border transactions in a cost-efficient manner, making these services significantly more accessible and faster for the everyday person.
This way, financial institutions can access liquidity and expand in coverage and grow in volume, without any prefunding or additional working capital requirements. In addition, Arf leverages a blend of traditional and alternative data by developing a proprietary credit engine and an in-house credit score. This sophisticated approach enables optimized risk-adjusted pricing, providing Arf clients with an enhanced and customized financial experience.
Arf and Huma Finance have joined forces to create the world’s first on-chain credit pool for cross-border payments, aiming to enhance transparency and traceability in the industry. As part of this partnership, Arf tokenizes cross-border payment orders through Huma Protocol in a privacy-preserving manner and uses them as collateral to borrow from the lending pools.
The collaboration brings all loans, repayments, and receivables onto the blockchain, creating a fully traceable borrowing record. Every transaction, including late repayments and even default rates, will be visible on-chain, ensuring comprehensive and daily transparency while maintaining privacy. This way, lenders can effectively assess risks and promote secure working capital, while financial institutions can expand their operations and meet the increasing global demand with enhanced access to liquidity.
“We are committed to making liquidity more accessible, bringing day-to-day transparency into cross-border payments by utilizing the right digital assets,” says Arf Co-founder and CEO Ali Erhat Nalbant. “We're excited to partner with Huma to have receivable-backed lending on-chain, which will enhance our transparency capabilities to an unprecedented level.”
Huma Finance Co-founder Erbil Karaman says, “Our partnership with Arf embodies our vision of creating a more equitable financial ecosystem. We're not only enhancing the liquidity access and achieving an unprecedented level of transparency, we are also making the remittances systemically cheaper and faster. We're excited to work with Arf to drive the evolution of global finance forward.”
About Arf
Arf is a global liquidity and settlement platform for licensed financial institutions, offering digital asset-based working capital credit lines and settlement services with fiat on- and off-ramp capabilities. With a commitment to transparency, Arf strives to overcome liquidity constraints in the industry and empower financial institutions worldwide. For more information, visit arf.one.
About Huma Finance
Huma Finance builds the infrastructure powering an ecosystem for real-world lending solutions. With a mission to make the crypto industry more accessible and supportive of practical use cases, Huma Finance enables borrowing against cash flows and receivables, opening up new possibilities for individuals and businesses around the world.
