GIBRALTAR–A bank has begun to allow borrowers to obtain loans using Bitcoin as collateral.
With Bitcoin’s value currently hovering between $95,000 and $97,000, Seamus Rocca, CEO of Xapo Bank, said there is growing investor confidence that Bitcoin can serve as collateral for loans.
“I’m not sure that confidence would have been there three or four years ago,” Rocca told Cointelegraph. “But today, people are more comfortable to borrow against Bitcoin because we’re nowhere near the levels that would trigger liquidation.”
Product Launched
Earlier this year Xapo Bank launched a lending product that allows users to borrow in U.S. dollars using their Bitcoin as collateral.
“With the product, qualified clients can access up to $1 million in loans while keeping their BTC,” according to CoinTelegraph.
Rocca told CoinTelegraph Bitcoin-backed loans are an “obvious” next step and that growing confidence in crypto’s long-term trajectory had fueled demand for the product, which he said has been driven by developments leading to broader institutional adoption.
The Expectations
“Expectations are for institutional space coming in, the ETFs, and the mood music on Bitcoin is much more about wider adoption and long-term thinking than very short-term speculation,” Rocca said.
The Xapo Bank CEO told CoinTelegraph its Bitcoin-backed loans offer loan-to-value ratios of 20%, 30% and 40%, giving borrowers flexibility while managing risk. “If you get a 20% LTV loan and you have 100 Bitcoin, as a lot of early adopters do, that’s still a couple of million dollars you can borrow without having to sell them,” Rocca was quoted as saying.
