Loans

How Does a Crypto-Backed Loan Work?

Published, 17 September, 2020

One of the more exciting advancements in the cryptocurrency industry is the ability to leverage your crypto holdings to borrow fiat currencies. At BlockFi, we offer collateralized loans using Bitcoin (BTC), Ether (ETH), or Litecoin (LTC) to get USD loans.

How does crypto lending work?

Well, with traditional collateralized loans, the borrowers will stake an asset and receive money in response. The main benefit is that you don’t have to sell any of your assets in order to receive this funding. With BlockFi, instead of using a home or business, you’re collateralizing your crypto assets.

Why is not having to sell your crypto important? Well, if you believe that your investments will go up in price over time, you may not want to sell them before they reach that maturity. With a BlockFi loan, you keep all the upside potential of your crypto. Additionally, any forks that happen during the term of your loan will be passed back to you as long as our custodians support that fork. Click here for more information on how we store your digital assets.

Another major benefit of not having to sell your crypto, BlockFi asset backed loans can also have positive tax benefits. For example, your loan does not involve any taxable events. That means there are no capital gain taxes to claim. With that said, everyone’s situation is different and we are not tax experts. Please consult with an accountant before making financial decisions. Click here for more information on how BlockFi can limit your tax exposure.

What can I use a crypto asset loan for?

There are a number of use-cases for a BlockFi loan. One of the main use-cases our clients report is for investing in real estate. Whether you’re buying your first home or renovating, a crypto asset backed loan is a great way to access the value of your crypto without selling. Other uses-cases include diversifying investments and paying off higher-cost debt.

BlockFi also has a number of business clients who look to us to help them do anything from funding payroll to paying for an expansion. We’re proud to provide this level of liquidity to help grow the crypto ecosystem.

How does a BlockFi loan work?

It takes less than 2 minutes to apply for a BlockFi loan. Once submitted, our BlockFi team will give you a decision and present you with loan terms within hours. After you accept and send your collateral, we will wire USD directly into your bank account. It’s as simple as that.

Additionally, we have the largest US lending footprint. If you’re looking for a way to leverage your digital assets without having to sell, apply for a BlockFi loan today.

Have questions? Contact us here!

Last updated on June 14th, 2022

As of February 14, 2022, the BlockFi Interest Account (BIA) is no longer available to new clients who are US persons or persons located in the US and existing US clients with BIA accounts are unable to transfer new assets to their BIAs. Learn More.

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Digital currency is not legal tender, is not backed by the government, and crypto accounts held with BlockFi are not subject to FDIC or SIPC protections. Digital currency values are not static and fluctuate due to market changes. Not all products and services are available in all geographic areas and are subject to applicable terms and conditions. Eligibility for particular products and services is subject to final determination by BlockFi. Rates for BlockFi products are subject to change.

BlockFi Rewards Credit Card: For more information, please see BlockFi’s Terms of Service. BlockFi is not a Bank. Cards are issued by Evolve Bank & Trust, Member FDIC, pursuant to a license from Visa® USA Inc. Rewards are not offered by Evolve Bank & Trust and are instead offered and managed by BlockFi.

BlockFi International Ltd. holds a Class F digital assets business license under the Digital Assets Business Act, 2018 (as amended) and is licensed by the Bermuda Monetary Authority to conduct the following digital assets business activities: (i) issuing, selling or redeeming virtual coins, tokens or any other form of digital assets (ii) operating as a digital asset exchange (iii) providing custodial wallet services (iv) operating as a digital asset derivative exchange provider and (v) operating as a digital assets services vendor.

See blockfi.com/terms for more information.