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Xapo Bank, a planetary cryptocurrency-friendly slope headquartered successful Gibraltar, is betting connected crypto lending revival by launching Bitcoin-backed US dollar loans.
Qualifying Xapo Bank clients tin present entree Bitcoin (BTC) loans of up to $1 million, the steadfast said successful an announcement shared with Cointelegraph connected March 18.
The caller lending product is designed for semipermanent Bitcoin hodlers who privation to entree currency portion keeping their BTC, Xapo Bank CEO Seamus Rocca told Cointelegraph.
“Unlike accepted assets, Bitcoin is an perfect signifier of collateral — it is borderless, highly liquid, disposable 24/7, and easy divisible, making it uniquely suited for lending,” Rocca said.
No collateral re-usage
A cardinal favoritism of Xapo’s Bitcoin indebtedness merchandise is that the slope does not rehypothecate the indebtedness collateral by users, meaning that its lending mechanics does not impact the re-usage of BTC assets by clients.
Instead, the Bitcoin collateral is stored successful Xapo’s BTC vault utilizing organization multiparty computation (MPC) custody.
Working of a crypto lending platform.
Eligible Xapo clients tin take repayment schedules of 30, 90, 180 oregon 365 days, with nary penalties for aboriginal repayment, the steadfast said.
Who is eligible?
Xapo’s caller Bitcoin lending offering volition beryllium disposable to pre-approved members based connected respective criteria.
The cardinal criteria for eligibility are the magnitude of Bitcoin holdings and the play of holdings, arsenic Xapo specifically targets semipermanent BTC holders with a semipermanent concern strategy.
According to the bank, the offering volition beryllium disposable to planetary investors successful regions similar Europe and Asia, excluding residents of the United States.
The database of jurisdictions supported by Xapo Bank. Source: Xapo Bank
Xapo Bank is regulated by the Gibraltar Financial Services Commission nether the Financial Services Act 2019. In 2024, the slope successfully passported its banking licence successful the United Kingdom, granting its Xapo Bank App afloat entree to the country.
While Xapo’s lending is offered crossed the European Union, crypto lending is not covered by section regulations similar the Markets successful Crypto-Assets framework.
A revival pursuing galore collapses
Xapo Bank’s caller BTC indebtedness motorboat comes a fewer years aft the crypto lending manufacture suffered a large situation successful 2022.
The situation came amid the historic Terra crash and a subsequent carnivore market that triggered the collapses of large lending providers similar Celsius and BlockFi.
“The illness of Celsius, BlockFi, and different centralized lenders importantly eroded spot successful the crypto lending space,” Xapo Bank CEO told Cointelegraph.
An illustration of the Bitcoin lending process connected the Xapo Bank App. Source: Xapo Bank
“Borrowers contiguous workout greater caution, prioritizing platforms with a proven way grounds successful Bitcoin custody and those that connection secure, transparent solutions — particularly ones that bash not prosecute successful rehypothecation,” Rocca said, adding:
“At the aforesaid time, request for Bitcoin-backed loans is connected the rise, peculiarly among high-net-worth individuals and organization investors who question liquidity without selling their Bitcoin holdings.”In summation to removing plus rehypothecation and MPC security, Xapo offers hazard absorption tools and proactive extortion to forestall automatic liquidations.
Related: Bitwise makes archetypal organization DeFi allocation
“In the lawsuit of a Bitcoin terms drop, customers person instant notifications, allowing them to either apical up their collateral oregon marque partial repayments to support their indebtedness status,” Rocca noted.
Xapo is not the lone steadfast that has been moving to present lending products successful 2025. In aboriginal March, Bitcoin developer Blockstream secured a multibillion-dollar investment to motorboat 3 caller organization funds, with 2 of them offering BTC lending.
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