Xapo Bank Introduces Homeloans Secured by Bitcoin for Long-Term Investors
Bitcoin Loans with Xapo Bank: Access Cash Without Selling Your Crypto
Xapo Bank has introduced a revolutionary Bitcoin-backed loan program, empowering long-term Bitcoin (BTC) holders to borrow cash without parting ways with their crypto assets. This tailor-made solution is ideal for individuals seeking liquidity to fund purchases such as homes, vehicles, or financial needs.
Xapo Bank's Bitcoin Lending Offering
Seeing the growing demand for flexible financing options in the crypto space, the Gibraltar-based bank has unveiled its Bitcoin-backed lending program. The program is designed mainly for Bitcoin enthusiasts who wish to maintain their investment while meeting their short-term cash requirements.
Key Features of Xapo Bank's Bitcoin Loans
- Flexible Loan-to-Value (LTV) Ratios: Xapo Bank offers conservative LTV ratios between 20% and 40% to mitigate liquidation risks. This means that the BTC price needs to fall below $40,000 for a liquidation event to occur. Currently, BTC is trading around $81,400, declining more than 2.3% in the past 24 hours.
- Repayment Flexibility: Borrowers can choose repayment periods of 30, 90, 180, or 365 days, with no penalties for early repayment. This allows individuals to manage their finances effectively, holding onto their Bitcoin while paying down the loan.
- Real-Time Loan Tracking: Xapo Bank provides real-time tracking tools, enabling clients to monitor their loan health and make informed decisions about managing risks.
Secure Custody for Seamless Lending
Unlike some other crypto lending platforms, Xapo Bank 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 repaid in full.
Upon approval of a loan, the funds are instantly deposited into the borrower's Xapo bank account, providing quick access to cash without forcing sellers to sacrifice potential Bitcoin price appreciation.
Established in 2013 as a Bitcoin wallet and custodian, Xapo Bank has been a frontrunner in the crypto banking sector. Well-known for its secure storage solutions, including Swiss mountain bunkers, the institution has expanded its services over the years.
Bitcoin Lending: A Growing Trend
The launch of this Bitcoin-backed lending product comes amid a rising trend of crypto holders seeking alternative ways to secure capital without liquidating assets. With the resurgence of Bitcoin lending in the U.S. market following the demise of centralized lenders like Celsius and BlockFi in 2022, institutions are discovering new ways to integrate Bitcoin into traditional financial services.
For instance, Coinbase rejuvenated its Bitcoin-backed loan program in January, leveraging decentralized lending protocols. Meanwhile, some asset managers are turning to decentralized finance (DeFi) to generate yield from Bitcoin-backed loans, with Bitwise recently allocating funds on the Maple Finance lending protocol.
Source: CoinDesk [Enrichment]
- Xapo Bank, known for its secure storage solutions, has introduced a Bitcoin-backed loan program that allows long-term Bitcoin investors to access cash without parting ways with their crypto assets, catering to the growing demand for flexible financing options in the crypto space.
- The Bitcoin-backed lending program offered by Xapo Bank features flexible Loan-to-Value (LTV) ratios between 20% and 40%, offering borrowers the convenience of managing their finances effectively while holding onto their Bitcoin.
- Xapo Bank does not rehypothecate the BTC collateral for its loans; instead, the Bitcoin used as security is stored in Xapo's secure institutional multiparty computation (MPC) custody vault until the loan is repaid in full, ensuring the safety of investors' assets.
- With traditional financial institutions like Coinbase reviving Bitcoin lending programs and asset managers exploring decentralized finance (DeFi) for Bitcoin-backed loans, the trend of crypto holders seeking alternative ways to secure capital without liquidating assets is growing.
- Established in 2013, Xapo Bank has expanded its services over the years, emphasizing its commitment to innovation in the finance and technology sector while maintaining its focus on the security and efficiency of crypto investments.
