Crypto Backed Loans: Borrow Against Your Coins Without Selling

If you're holding a meaningful crypto position, you've probably run into the same problem a lot of real estate investors know well: you have real value sitting on the books, but turning it into usable cash usually means giving something up. With crypto, that something is usually your upside and a chunk of it to capital gains tax.

There's a better option that more investors are starting to use: borrowing against your crypto instead of selling it.

Why the last wave of crypto lenders collapsed

You probably remember Celsius, BlockFi, and Voyager. All three were gone by the end of 2022, and it wasn't bad luck. It was structural.

Customer collateral was re-hypothecated, meaning it was lent out again or redeployed for yield instead of sitting untouched. There was no real segregation between pledged assets and the platform's own balance sheet, and the risk inside those platforms was opaque. Nobody outside could see how exposed the collateral pool actually was until it was too late. When Terra, Luna, and Three Arrows Capital collapsed within the same few months, the contagion spread fast and withdrawals froze across all three platforms.

How a crypto backed loan is structured today

The core idea hasn't changed: borrow instead of sell. The plumbing underneath it has.

The old model pooled collateral and re-lent it, carried full recourse to the platform instead of a bank, hid risk inside the platform, and had no independent custodian.

This structure works differently. It's non-recourse, so there's never a personal guarantee behind the loan. Your crypto is held under a control agreement with a regulated custodian, not the lender itself, and nothing moves except as the loan terms allow.

What it looks like in practice

You pledge eligible, publicly traded crypto (think Bitcoin) as collateral with a regulated custodian. No coins are sold. A lender advances cash against the pledged value, so you get liquidity without liquidating your position. You keep the asset and every bit of the upside if the price climbs, and since nothing was sold, no capital gains are triggered until you choose to sell, if ever.

Typical terms look like this:

• Up to 75% max loan to value, depending on liquidity, volatility, and trading history
• 1.5% to 7% annual interest, interest only, typically paid quarterly
• Loan sizes from $50K up to $500M and beyond
• Terms of 3, 5, 7, or 10 years
• Non-recourse throughout
• No FICO exposure, no credit check, entirely collateral based, similar to a stock backed loan

The honest risk conversation

Volatility is real, and it's worth understanding exactly what that means for you. If the price drops past agreed thresholds, the lender typically asks for a margin top-up, more crypto or cash to bring the position back to a safe level.

If a top-up isn't made, the lender's remedy stays limited to the pledged asset. It never becomes personal debt, and they can never come after your other assets. That single point, non-recourse, is what separates this structure from what happened to Celsius, BlockFi, and Voyager.

A quick example

Say you're holding $500K in eligible crypto. Sell it, and you owe capital gains tax on the sale, you get cash once, and you have zero exposure to any future upside. Borrow against it instead, and you can access roughly $175K in cash with no sale and no tax event, while keeping full upside on the position. Your only exposure throughout the term is either a top-up if the market drops, or the lender taking the pledged crypto. It never touches your other assets.

Who this fits, and who it doesn't

This is built for holders of established, liquid, publicly traded crypto, positions that clear a minimum daily trading value test, and serious holders who don't want to break a long term position. It's not the right fit for speculative, low volume, or low cap tokens, or for anyone unwilling to place assets into custody for the loan term.

How the process works

From inquiry to funding typically takes five to ten business days once everything is complete. You share the basics, go through screening, get your terms, complete underwriting and know your customer requirements, then move to custody. Most of the timeline comes down to how promptly documentation and asset details get provided.

The bottom line

You don't have to break a position you believe in to access liquidity. Selling locks in cash but forfeits your upside for good and comes with a tax bill on the way out. Borrowing against your crypto keeps the upside intact, defers the tax event, and stays non-recourse throughout.

If you want to see what your position could unlock, the application process is straightforward: share your asset, quantity, exchange or venue, and approximate value to get started.