Question 1

How Does a Crypto-Backed Loan Work?

Accepted Answer

BlockFi offers USD loans collateralized by your crypto assets. What does that mean? Well, we give you USD and you give us Bitcoin (BTC), Ether (ETH) , or Litecoin (LTC) as security for repayment. It’s really that simple. Clients can apply for a loan in less than 2 minutes and be funded in USD, GUSD, or USDC directly into their bank accounts or wallets in as few 90 minutes. Cool, right?

Question 2

How Collateral Changes Can Lead to a Margin Call

Accepted Answer

If the value of your collateral significantly decreases, a crypto margin call may occur. Crypto margin calls are calculated based on the LTV (loan-to-value) rate outlined in your loan agreement. A margin call can happen when the value of your collateral drops, increasing the LTV of your loan. In the event of a margin call, you will have to add more collateral to your account to maintain a healthy LTV ratio. The first margin call occurs at a 70% LTV. At this point, you have 72 hours to take action by posting additional collateral or paying down the loan balance. We will keep you informed if your LTV starts to near the 70% mark so you can take action preemptively. If your LTV reaches the 80% mark, BlockFi will automatically sell a portion of your crypto collateral to bring your LTV back to a 70% LTV.

Question 3

What is the Loan-to-Value (LTV) Ratio

Accepted Answer

LTV (%) = Loan Amount ÷ Value of Collateral. A loan’s LTV (loan-to-value) ratio determines the amount of crypto collateral you need to post in order to take out a loan. This number only applies when you’re getting a collateralized loan. These types of loans require clients to give the lender an asset, in our case digital currency, to hold until their loan is paid off. Once the loan is paid off, you’ll receive the full collateral back.

Question 4

How to Make Major Purchases with a Crypto-Backed Loan

Accepted Answer

One of the most common questions crypto users have is whether they can make a major purchase, like buying a house or a car, with their crypto assets. The answer can be complicated, as many mortgage providers don’t accept crypto as collateral. One possible solution is using crypto-backed loans to secure cash that can be put toward a major purchase. That’s right: You can now leverage your crypto holdings to borrow cash you can use to meet a wide range of financial goals. These include making a down payment on a home, investing in real estate, purchasing a car, funding a business, making home renovations, or refinancing high-interest debt, among other purposes.

Why get a BlockFi Loan?

Receive your funds the same business day

Pay back without any penalties

Increase your stack without selling

Learn more about BlockFi's Crypto-Backed Loans