Birch Hill Holdings, an institutional online credit infrastructure company focused on lending and tokenized asset markets, has closed a $2.5 million pre-seed funding round with support from Parafi Capital and Castle Island Ventures.

The round was structured as a simple contract for equity futures (SAFE). It opened in late November and closed in early 2026, Birch Hill CEO Bhavin Ved told The Block. Nascent, FalconX Ventures, JST Digital, and Flowdesk also participated in the round, along with angel backers such as Blewrock founder and CEO Ramin Kampfer. The company did not disclose the post-money price.

The New York-based firm said it is building an institutional lending strategy designed to prioritize capital preservation and structural risk control, starting with its initial portfolios Morpho. Birch Hill has joined the platform as an institutionally focused curator and plans to expand to additional protocols such as Oller, Waid said.

“Credit markets stand to benefit from the efficiencies of blockchain-based settlement, but institutional participation has been limited by the need for robust risk oversight and operational clarity,” Vaid said in a statement. “Our aim is to bring together traditional credit investment disciplines with a modern infrastructure that meets institutional standards of governance, transparency and risk management.”

Birch Hill’s founding team brings experience from both traditional finance and digital asset infrastructure. Ved began his career in structured credit at Goldman Sachs and later in private equity investing at Cerberus Capital, before joining digital asset investment firm 10T Holdings in 2021. Fourlines and Flanagan later co-founded Unit Zero Labs, a research firm focused on Onchain protocol analytics, now operating as Birch Hill Labs and advancing the firm’s vault design and quantitative risk frameworks.

Building institutional risk controls for onchain credit

Birch Hill’s approach centers on its collateral risk framework, which tracks collateral liquidity, oracle redundancy, and market level metrics in real time. The system is designed to support transparent governance and documentation for regulatory and client reporting, the firm said.

“Most Onchain risk models focus on liquidation parameters and protocol-level safety,” Vaid told The Block. “Our framework consists of institutional-level monitoring and real-time tracking of collateral quality, liquidity depth, and oracle integrity, combined with an auditable governance layer designed for regulatory and client reporting. It’s designed for allocators who need to explain their risk exposure to the board or not just to avoid a bad debt officer.”

Birch Hill is targeting traditional asset managers, credit concentrators, registered investment advisers, family offices, and other funds seeking compliant, auditable exposure to higher credit, and is currently in active discussions with multiple parties, Vaid said.

Rather than gross production from existing DeFi pools, the company said it aims to increase credit generation by bringing real-world assets and institutional lenders online, a thesis that requires different infrastructure and risk controls.

As curator, Birch Hill sets the vault’s parameters, selects eligible collateral, establishes risk limits, and oversees ongoing monitoring. According to the team, its institutional focus translates into tighter collateral standards, more conservative loan-to-value ratios, and detailed exposure reporting.

“For example, we may exclude collateral assets that are accepted by other curators if the liquidity profile or oracle coverage does not meet our criteria,” Vaid said. “We also provide institutional clients with detailed reporting on portfolio exposures, collateral composition, and risk metrics—the same information they expect from a traditional credit manager. Each parameter change has a documented justification. The goal is portfolios that institutions can underwrite and explain to their stakeholders.”

With the fresh capital, Birch Hill said it plans to expand its engineering and risk infrastructure teams and pursue regulatory approvals, including potential registration as a registered investment adviser and reviewing broker-dealer registration in the United States.

Disclaimer: The Block is an independent media outlet that provides news, research and data. As of November 2023, Foresight Ventures is the majority investor in The Block. Foresight Ventures invests. Other companies In the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. Block continues to work independently to provide objective, effective, and timely information about the crypto industry. Here are our current financial disclosures.

© 2026 The Block. All rights reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.