How Crypto-Backed Loans Work

A crypto-backed loan lets you borrow money using your cryptocurrency as collateral. Instead of selling your Bitcoin or Ethereum — and potentially triggering a taxable event — you lock it up, receive cash or stablecoins, and get your crypto back when you repay. It is the same idea as a secured loan against a house or car, just settled in minutes and secured by digital assets.

In one sentence

You deposit crypto, borrow against its value, pay interest, and reclaim your collateral on repayment.

The four moving parts

1. Collateral

This is the crypto you deposit to secure the loan — typically Bitcoin (BTC), Ethereum (ETH) or a stablecoin. The platform holds it for the life of the loan. Because the loan is fully secured by this collateral, there is no credit check and your credit score is never affected.

2. Loan-to-value (LTV)

LTV is the ratio of how much you borrow to the value of your collateral. If you deposit $10,000 of crypto and borrow $5,000, your LTV is 50%. Lower LTV means a bigger safety buffer; higher LTV means more borrowing power but more risk of liquidation if prices fall.

3. Interest

You pay interest on the amount you borrow, usually quoted as an annual percentage rate (APR). Rates depend on the asset, the loan term and current market conditions. Interest accrues over time and is settled when you repay.

4. Repayment & liquidation

Repay the loan plus interest at any time and your full collateral is released. If the value of your collateral drops too far — pushing your LTV past a set threshold — the platform can liquidate part or all of it to protect the loan. Avoiding liquidation is the single most important part of managing a crypto loan.

Why borrow instead of sell?

Keep your upside. You still benefit if your crypto rises in value while the loan is open.
Stay liquid. Cover an expense or seize an opportunity without offloading assets you believe in.
Avoid a taxable sale. In many jurisdictions, borrowing is not a disposal — but always confirm with a tax professional.
Speed. No paperwork, no underwriting, no waiting days for approval.

What is leverage?

Leverage lets you take a position larger than your deposited collateral. Higher leverage multiplies potential returns — and potential losses — and tightens the price move needed to trigger liquidation. It is a powerful tool that demands disciplined position sizing and an understanding of the risks. See how this works with Bitcoin →

Ready to borrow against your crypto?

Deposit collateral and get instant liquidity — no credit check.

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Frequently asked questions

Do crypto loans require a credit check?

No. Because the loan is fully secured by your crypto collateral, there is no credit check and no impact on your credit score.

What happens if my collateral drops in value?

If the value falls far enough that your loan-to-value ratio crosses the liquidation threshold, the platform may sell part or all of your collateral to repay the loan. You can avoid this by adding collateral or repaying early.

Can I get my crypto back?

Yes. When you repay the loan plus accrued interest, your full collateral is released back to you.

Is borrowing against crypto taxable?

In many jurisdictions taking a loan is not treated as a sale, so it may not be a taxable event — but liquidation can be. Always confirm with a qualified tax professional for your situation.