Xapo Bank has unveiled a Bitcoin mortgage loan program, allowing eligible clients to borrow up to $1 million without selling their cryptocurrency.
Xapo's New Lending Program Unveiled
The Gibraltar-based crypto bank employs a conservative loan-to-value (LTV) ratio between 20% and 40%, helping to mitigate liquidation risks. This means that BTC prices will have to fall below $40,000 for a liquidation event to occur. BTC is now trading around $81,400 with a decline of more than 2.3% in the past 24 hours. Borrowers can choose repayment terms of 30, 90, 180, or 365 days, with no penalties for early repayment. Additionally, Xapo Bank provides real-time tracking tools, allowing clients to monitor their loan health and manage risks effectively.
Secure Custody Ensures Asset Protection
Unlike some other crypto lending platforms, Xapo does not rehypothecate the BTC collateral—meaning the Bitcoin used as security is not loaned out or otherwise re-utilized. Instead, it is stored in Xapo’s secure institutional-level custody vault until the loan is fully repaid. Once a loan is approved, the funds are instantly deposited into the borrower’s Xapo bank account, providing quick access to liquidity without the downside of selling Bitcoin, which could lead to missing out on potential price appreciation. Initially established in 2013, Xapo Bank has been a pioneer in crypto banking.
Bitcoin Lending Gains Momentum in Traditional Finance
The launch of this Bitcoin-backed lending product comes amid a growing trend of crypto holders seeking alternative ways to access capital without liquidating assets. With the resurgence of Bitcoin lending in the U.S. market following the collapse of centralized lenders like Celsius and BlockFi in 2022, institutions are finding new ways to integrate Bitcoin into traditional financial services. For example, Coinbase, which halted its Bitcoin-backed loan program in 2023, revived the initiative in January, leveraging decentralized lending protocols.
The introduction of Xapo's new Bitcoin loan program symbolizes the growing desire of financial institutions to integrate cryptocurrency assets into traditional banking products, offering clients new opportunities for accessing capital.
