If you are not ready to part with decentralized money, at a time when prices are relatively low, but need some fiat cash to cover costs in times of crisis, crypto-backed loans are a working solution. A number of platforms offer this type of service and their popularity is growing among cryptocurrency enthusiasts who are intent on hodling.
Borrow Fiat Money With Crypto-Backed Loans
Various providers allow you to borrow against your crypto. Blockfi, a wealth management platform for crypto investors, extends loans in U.S. dollars backed by three cryptocurrencies, BTC, ETH and LTC. Use its calculator to enter an amount you’d like to get, minimum $5,000, and calculate the required collateral. To receive $10,000, for instance, you’ll have to deposit 3.53 BTC at the time of writing, based on a 50% loan to value ratio (LTV). To receive an individual offer, you must create a Blockfi account.
On the backdrop of the troubles facing the traditional financial sector, the nascent crypto banking industry has seen more positive development. Unlike banks in many countries, crypto lending platforms have been able to offer high interest rates and new services too. Blockfi recently announced that its balance sheet is “stronger than ever” and its margin has expanded. As a result, it’s going to raise interest rates on BTC and ETH deposits starting from April 1.
Another leading provider of loans backed by cryptocurrency is Salt Lending which operates in multiple markets. Salt takes a dozen coins as collateral including BTC, BCH, XRP, ETH, and LTC. The website lets you determine the conditions of your loan including the LTV ratio between 30 and 70% and the repayment period, three to 12 months. Interest rates start from 5.95% APR. In December, the trading platform Uphold announced a deal with Salt Lending to provide its users with fiat and stablecoin loans using crypto as collateral.
Partnerships Extend New Banking Services to Crypto Community
Cooperation within the blockchain space helps to expand the coverage of crypto credit and banking services. Crypto-friendly Silvergate Bank, a U.S.-based financial institution, announced in January a new product allowing customers to obtain loans collateralized by bitcoin. SEN Leverage was launched with the participation of cryptocurrency exchange Bitstamp, as news.Bitcoin.com reported. A partnership with Cred provides Bitcoin.com Wallet users with the opportunity to earn up to 10% interest on their BTC and BCH held with the platform that also permits the borrowing of funds, offering sub-10% APR on crypto-backed loans.
Nexo is a crypto lender targeting cryptocurrency holders in over 200 jurisdictions who can borrow in more than 40 fiat currencies against their digital assets. In December, the company introduced loans backed with bitcoin cash (BCH) and users can borrow in local currency when they need liquidity without selling their BCH. Nexo’s loan rates start from 5.9% APR. Its instant credit lines are available after you deposit cryptocurrency to your account. You can also earn 8% interest on euro and stablecoin deposits with Nexo. Bitcoin cash users can benefit from saving with crypto exchange Binance’s lending facility. It recently added BCH, ETH and EOS to its flexible deposit options which already supported BTC, BNB and two stablecoins, BUSD and USDT.
Youhodler is an established player in the sector which lends funds in euro, U.S. dollar and tether against the top 12 cryptocurrencies and it also pays out up to 12% APR on deposits in six cryptocurrencies including BTC, BNB and all major stablecoins. The company claims to have the highest loan-to-value ratio, up to 90%, with a minimum amount starting at just $100. Other competitors offering crypto-backed loans include Unchained Capital (accepts BTC with 35-50% LTV), Hodl Finance (uses BTC, ETH and XRP as collateral at 50% LTV) and Coin Loan (takes six cryptocurrencies with loan to value ratio of up to 70%). Lendabit facilitates peer-to-peer lending and borrowing against crypto collateral in BTC and ETH.
What other crypto-backed loan services would you recommend? Let us know in the comments below.
Disclaimer: This article is for informational purposes only. It is not an offer or solicitation of an offer to buy or sell, or a recommendation, endorsement, or sponsorship of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Images courtesy of Shutterstock, Blockfi, Cred.
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