Home›Crypto›Regulation›Crypto-backed loans let users borrow cash without sell…

Crypto-backed loans let users borrow cash without selling Bitcoin

Figure says its model can advance up to 75% of collateral value using BTC, ETH, or SOL, with fixed rates and optional liquidation protection.

Reported · Written up by our desk · Regulation

Crypto-backed loans allow holders to get cash against their Bitcoin, Ethereum, or Solana holdings without selling the coins, which the lender says can help borrowers avoid a capital-gains event. Decrypt describes the basic tradeoff: borrowers pledge crypto as collateral and receive cash from a lender while keeping ownership of the assets throughout the loan term.

Figure, as described by Decrypt, advises borrowers to compare four key terms when shopping for a crypto-backed loan. Those factors are maximum loan-to-value, fixed versus variable rates, licensing and regulation, and the liquidation terms that determine what happens if crypto prices move sharply.

The lender emphasizes that licensing and liquidation protection can matter more than the headline interest rate, given the risk of margin-call or forced liquidation during volatility. Decrypt also notes Figure is a licensed lender, funds same-day, and does not require a credit score for approval, with eligibility based on collateral rather than FICO.

On downside protection, Decrypt says Figure offers optional liquidation protection in select states that defers price-based liquidation for the loan term, aiming to reduce the chance of being forced to sell during a temporary dip. Decrypt adds that this overview is not tax advice and readers should consult a professional about their situation.

Latest closeBitcoin $63,445.80 ▼0.2%|Ethereum $1,887.58 ▲0.3%|Solana $75.65 ▼0.7%

More like this

Sources