Xapo Financial institution, a world cryptocurrency-friendly financial institution headquartered in Gibraltar, is betting on crypto lending revival by launching Bitcoin-backed US greenback loans.
Qualifying Xapo Financial institution shoppers can now entry Bitcoin (BTC) loans of as much as $1 million, the agency stated in an announcement shared with Cointelegraph on March 18.
The brand new lending product is designed for long-term Bitcoin hodlers who wish to entry money whereas conserving their BTC, Xapo Financial institution CEO Seamus Rocca informed Cointelegraph.
“Not like conventional property, Bitcoin is a perfect type of collateral — it’s borderless, extremely liquid, obtainable 24/7, and simply divisible, making it uniquely fitted to lending,” Rocca stated.
No collateral re-usage
A key distinction of Xapo’s Bitcoin mortgage product is that the financial institution doesn’t rehypothecate the mortgage collateral by customers, that means that its lending mechanism doesn’t contain the re-usage of BTC property by shoppers.
As a substitute, the Bitcoin collateral is saved in Xapo’s BTC vault utilizing institutional multiparty computation (MPC) custody.
Working of a crypto lending platform.
Eligible Xapo shoppers can select reimbursement schedules of 30, 90, 180 or one year, with no penalties for early reimbursement, the agency stated.
Who’s eligible?
Xapo’s new Bitcoin lending providing might be obtainable to pre-approved members primarily based on a number of standards.
The important thing standards for eligibility are the quantity of Bitcoin holdings and the interval of holdings, as Xapo particularly targets long-term BTC holders with a long-term funding technique.
In accordance to the financial institution, the providing might be obtainable to international traders in areas like Europe and Asia, excluding residents of the US.
The record of jurisdictions supported by Xapo Financial institution. Supply: Xapo Financial institution
Xapo Financial institution is regulated by the Gibraltar Monetary Providers Fee underneath the Monetary Providers Act 2019. In 2024, the financial institution efficiently passported its banking license in the UK, granting its Xapo Financial institution App full entry to the nation.
Whereas Xapo’s lending is obtainable throughout the European Union, crypto lending just isn’t coated by native rules just like the Markets in Crypto-Belongings framework.
A revival following quite a few collapses
Xapo Financial institution’s new BTC mortgage launch comes a number of years after the crypto lending business suffered a serious disaster in 2022.
The disaster got here amid the historic Terra crash and a subsequent bear market that triggered the collapses of main lending suppliers like Celsius and BlockFi.
“The collapse of Celsius, BlockFi, and different centralized lenders considerably eroded belief within the crypto lending house,” Xapo Financial institution CEO informed Cointelegraph.
An instance of the Bitcoin lending course of on the Xapo Financial institution App. Supply: Xapo Financial institution
“Debtors immediately train better warning, prioritizing platforms with a confirmed monitor report in Bitcoin custody and people who supply safe, clear options — particularly ones that don’t interact in rehypothecation,” Rocca stated, including:
“On the similar time, demand for Bitcoin-backed loans is on the rise, significantly amongst high-net-worth people and institutional traders who search liquidity with out promoting their Bitcoin holdings.”
Along with eradicating asset rehypothecation and MPC safety, Xapo gives threat administration instruments and proactive safety to forestall computerized liquidations.
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“Within the occasion of a Bitcoin value drop, clients obtain on the spot notifications, permitting them to both high up their collateral or make partial repayments to keep up their mortgage standing,” Rocca famous.
Xapo just isn’t the one agency that has been working to introduce lending merchandise in 2025. In early March, Bitcoin developer Blockstream secured a multibillion-dollar funding to launch three new institutional funds, with two of them providing BTC lending.