Banks and Bitcoin Payments
Xapo Bank launches Bitcoin loans: access to cash without the need to sell
Eligible Xapo members will be able to access dollar loans of up to USD $1 million secured in Bitcoin. The product is available in Europe, Asia, and Latin America.
Bitcoin holders will be able to access cash without needing to sell their tokens with Xapo Bank
Eligible members can borrow up to USD $1 million, secured in Bitcoin
The bank establishes a prudent loan-to-value ratio of between 20% and 40%
Available for users in Asia, Europe, and Latin America
The new loans from Xapo Bank allow Bitcoin holders to access cash without needing to sell their holdings.
The cryptocurrency-friendly bank based in Gibraltar presented its new product on Tuesday that offers qualified members access to Bitcoin-backed loans of up to USD $1 million. This allows holders of the largest cryptocurrency to leverage the fiat value of their assets without having to sell them.
Seamus Rocca, CEO of Xapo Bank, explained to the news media that the new loan product is designed for long-term Bitcoin users who want to access cash and retain their tokens.
“If you are a Bitcoin holder and believe that its price will rise, selling is difficult,” explained Rocca to CoinDesk.
“Unlike traditional assets, Bitcoin is an ideal form of collateral: it has no borders, is highly liquid, is available 24 hours a day, 7 days a week, and is easily divisible, making it especially suitable for loans,” added the CEO. He continued to detail that the product is designed for Bitcoin investors looking to buy a house, improve their property, acquire a new car, pay for school tuition, or address any other eventual need without having to sell.
“Sometimes life gets in the way: You want to improve your kitchen, you have to pay for school tuition. Being able to have some liquidity in Bitcoin with someone you trust is a very attractive product for our customer base,” said Rocca.
Bitcoin loans available in Latin America
While other companies in the cryptocurrency industry already offer similar products, a distinction of Xapo loans is that the bank does not re-hypothecate the collateral of the loans by users, meaning their lending mechanism does not involve the reuse of Bitcoin assets by clients, reported Cointelegraph.
Instead, the collateral in Bitcoin is stored by the bank through institutional multi-party computation (MPC) custody.
Xapo Bank establishes a prudent loan-to-value ratio of between 20% and 40%, thus protecting the Bitcoin funds of its clients. In other words, the price of Bitcoin would have to plummet below $40,000 from its current quote of around USD $82,000 for liquidations of borrowers to occur, according to coverage.
Eligible customers for Xapo loans can choose repayment terms of 30, 90, 180, or 365 days, with no penalties for early repayments. A tracker provides real-time information on the loan status and potential risks.
The bank's website reveals that the new offering will be available to investors worldwide in regions such as Europe, Asia, and Latin America, including countries like Mexico, El Salvador, and Uruguay. Residents of the United States are excluded from the list.
Xapo Bank is regulated by the Gibraltar Financial Services Commission and also has a banking license in the UK obtained in 2024, granting the entity full access to that country.
Recently, the cryptocurrency exchange Uphold announced a partnership with the decentralized lending protocol Exactly to offer its users the option to access cryptocurrency-backed loans, starting with the Latin American market.
