Xapo Bank Introduces Bitcoin-Backed Mortgage Loans for Long-Term Holders

Xapo Bank Introduces Bitcoin-Backed Mortgage Loans for Long-Term Holders

According to CoinDesk, Xapo Bank has unveiled a Bitcoin (BTC) mortgage loan program, allowing eligible clients to borrow up to $1 million without selling their cryptocurrency.

The new offering caters primarily to long-term Bitcoin holders seeking liquidity for purchases such as homes, vehicles, or other financial needs.

Xapo Bank Introduces New Bitcoin-Backed Lending Program

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.

BTC price on CoinMarketCap
BTC price. Source: CoinMarketCap

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 multiparty computation (MPC) custody vault until the loan is fully repaid.

Once a loan is approved, funds are instantly deposited into the borrower’s Xapo bank account, providing quick access to liquidity. This approach enables users to meet short-term financial needs without the downside of selling Bitcoin, which could lead to missing out on potential price appreciation.

Xapo Bank, initially established in 2013 as a Bitcoin wallet and custodian, has played a pioneering role in crypto banking. Known for its secure storage solutions, including Swiss mountain bunkers, the institution has expanded its services over the years.

The bank was one of the first crypto banks to set up a physical headquarters in Europe, choosing Gibraltar during the pandemic-era crypto boom. The bank has also gained regulatory approval in the UK, allowing it to offer interest-bearing Bitcoin accounts and other financial products.

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.

Beyond centralized lending platforms, some asset managers are turning to decentralized finance (DeFi) to generate yield from Bitcoin-backed loans. Bitwise recently allocated funds on the Maple Finance lending protocol, demonstrating a broader industry shift toward diversified lending solutions.

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