Xapo Bank, a wealth manager for long-term holders of Bitcoin, said it offers its members BTC-backed loans of up to $ 1 million.
Crypto loan became something of a Bête Noire In recent years, after a series of high -profile collapses and bankruptcies that shook the crypto industry. But Crypto-supported loans are now making a comeback, with companies such as USA-Listed Exchange Coinbase (Coin), which reintroduces Bitcoin-backed loans in January after withdrawing the service back in 2023.
Xapo CEO Seamus Rocca emphasizes the difference between the company’s wealth management service and what exchanges generally offer that is aimed at trade.
“If a stock exchange offers you secured lending, it is to encourage leverage,” Rocca said in an interview. “And the moment you have leverage unless you are a professional investor – and even when you are a professional investor – the risk of losing money is very high.
A conservative 20% -40% loan-to-value ratio protects customers’ Bitcoin, said Xapo, if Gibraltar-regulated Bank License has been passed into the UK, this means Bitcoin would have to go down to less than $ 40,000 from its current price for borrowers to be liquidated, Rocca said.
Xapo started in 2013 as a wallet and custodian, known for securing Bitcoin in Swiss mountain bunkers, a very safe alternative to self -insurance for long -term holders of the largest cryptocurrency. Ether (ETH) was recently added.
As the company began testing the water for Bitcoin-supported lending, the average loan size is assumed to be about $ 50,000. It soon became clear that some long -term proprietors would like more: those with the necessary $ 5 million of Bitcoin Collateral was looking for a $ 1 million loan. Xapo is able to arrange even larger loan on a case -by -case basis. The interest rate on the dollar is about 10%, Rocca said.
The main reasons why someone might want to take out a loan is to buy or upgrade a property, to buy a new car, followed by other various needs.
“If you are a Bitcoin holder and you have the belief that the price of Bitcoin will go up, it is difficult to sell some of it,” Rocca said. “But sometimes life gets in the way: You want to upgrade your kitchen, you have school fees to pay.
Xapo offers reimbursement plans of 30, 90, 180 or 365 days, without early repayment sanctions, while a loan health tracker provides real -time insight into loan status and potential risks, the company said in a press release.
