Spout, a US crypto platform built on the Solana blockchain, is testing a way for investors to borrow against their shares without paying any interest. The company, Spout Finance Inc., has raised $ 2 million, about R33 million, from backers including Draper Dragon, Anchorage Digital and Dutch trading firm Flow Traders, with strategic support from Solana Labs. Borrowers deposit tokenised US shares, digital tokens that track real company shares, and borrow up to half their value in USDC, a dollar-pegged stablecoin. No interest builds up for as long as the loan stays open.

The platform is still in testing, running only on Solana's test network, and the company says a private beta will open once its smart contracts have passed external audits.

The lenders still get paid, just not by the borrower. Each week, Spout sells covered call options on the shares deposited as collateral. A covered call gives a buyer the right to purchase the shares at a set price, the strike, in return for an upfront fee called a premium. Spout sets the strike well above the current share price, and the premiums go to the lenders instead of interest.

"Every borrower on Spout is running a covered call," says co-founder and chief executive Marc Ryan, a former investment banker who says he built it after seeing how much cheaper borrowing is for wealthy clients.

In the US, investors borrowing under $25,000 against their shares at large brokers such as Schwab and Fidelity pay about 12% a year, while private banks have long offered wealthier clients 4% to 6%. Spout's tokens are issued by the company itself, which is registered with US financial crimes regulator FinCEN, and it says each one is backed one-for-one by shares held at a regulated US broker that it does not name.

South Africans can already borrow against shares, but only with interest. EasyEquities' EasyCredit lends up to 33% of the value of a diversified portfolio of top 100 JSE shares and liquid ETFs, capped at R300,000, at prime plus 3%, around 13.75% at current rates, plus a 1% initiation fee, repayable within 12 months. FNB offers securities-based lending of up to 50% against Top 40 shares, and private banks such as Nedbank Private Wealth lend against portfolios worth R500,000 or more.

TechFinancials reported the raise and set out Spout's argument that investors end up paying to borrow against portfolios that are earning money for their brokers. Solana Compass detailed how Spout's tokens are issued and backed, and the 11 assets it plans to accept at launch, including Apple, Nvidia and Google shares. EasyEquities' own data shows how local borrowers behave: the average loan is only 20% of the portfolio's value, 92% of closed loans were repaid early, and 36% of the money borrowed went back into investments.

The demand is clearly there. EasyEquities' numbers show South Africans already borrow against shares carefully, mostly for short-term cash needs. A local version of Spout's idea, an interest-free loan paid for by selling options on the collateral, would be a genuinely new product for that market.

A founder would need three things to make it work: a liquid market for options on the shares used as collateral, a regulated way to hold those shares safely, and the right licences. Each is harder here than in the US.

The JSE does have a market for options on shares and indices, but trading in options on individual local shares is far thinner, which makes pricing them reliably every week difficult. Lending to consumers needs National Credit Regulator registration whether or not interest is charged, and anything built on tokenised shares falls under the FSCA's crypto regime, which is still tightening, as FNB's closed design for crypto trading shows.

Custody matters too: Spout's model depends on trusting that every token is backed by a real share at a broker it has not named. Founders and borrowers should also be clear about the trade-off. The loan is not free. By letting someone else buy your shares at the strike price, you give away any gains above it, so in a strong rally you could lose more in missed growth than you would have paid in interest.

And at 50% of the portfolio's value, a sharp market fall can still trigger a forced sale. Tax adds another layer, since gains and option income are taxed differently here. The opportunity is real, but whoever builds it needs to explain the cost as clearly as the benefit.

You might also like our piece on Squirrel Away listing its own fund on the JSE, Kuunda's secondary share sale, and Moody's signalling a possible upgrade.

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