Xapo Bank Launches Bitcoin-Backed Loans Up to $1 Million
Xapo Bank is now offering BTC-backed loans of up to $1 million for members, targeting long-term bitcoin holders. This move comes amid a resurgence in crypto lending following recent industry collapses.
- U.S.-listed exchange Coinbase has also reintroduced bitcoin-backed loans after previously discontinuing the service.
- Xapo emphasizes its wealth management focus, contrasting with exchanges that promote leveraged trading.
- The loan-to-value ratio ranges from 20%-40%, ensuring customer protection against significant bitcoin price drops.
- Current conditions mean borrowers would need bitcoin prices to fall below $40,000 to face liquidation.
- Xapo can accommodate larger loans on a case-by-case basis, with a standard interest rate around 10%.
- Common reasons for taking out loans include property upgrades and other personal needs.
- Flexible repayment options are available: 30, 90, 180, or 365 days, with no penalties for early payment.
Xapo began as a secure wallet service in 2013 and recently expanded its offerings to include Ethereum (ETH). The introduction of these loans aims to provide liquidity for bitcoin holders without necessitating asset sales.