Key Takeaways
- Xapo Bank is offering bitcoin-backed loans up to $1 million.
- Loans have flexible repayment terms and conservative 20-40% LTV ratios.
- Unlike Celsius and BlockFi, Xapo operates as a fully licensed bank.
Xapo Bank has introduced U.S. dollar loans backed by Bitcoin, providing long-term holders with liquidity without selling their BTC.
The loans offer flexible repayment terms of 30, 90, 180, or 365 days and maintain conservative loan-to-value (LTV) ratios of 20% to 40%.
Rebuilding trust in the lending sector
The move comes as the sector works to rebuild trust following the 2022 collapse of centralized lenders like Celsius and BlockFi.
Unlike those firms, Xapo operates as a fully licensed bank, which it hopes will reassure borrowers.
CEO’s statement on lending practices
Xapo Bank CEO Seamus Rocca said:
Many long-term bitcoin holders have steered away from crypto-asset-backed lending after seeing predatory lending practices. That’s why we’re doing things differently—giving our members financial control while preserving their Bitcoin’s value.
Borrowing process & features
Eligible Xapo Bank members can calculate their borrowing limits within the bank’s app, which also displays final repayment amounts and interest rates.
Approved loans are instantly deposited into the member’s USD bank account, with the corresponding BTC held in a secure vault until repayment.
Early repayment & loan management
Borrowers can repay early without penalties, and a real-time loan health checker provides updates on risks and collateral requirements.
If Bitcoin’s price falls below the LTV threshold, additional collateral is required to prevent liquidation.
Xapo Bank’s evolution
Founded in 2013, Xapo Bank transitioned from a Bitcoin wallet to a licensed retail bank and virtual asset service provider (VASP).
It guarantees USD deposits up to €100,000 and employs multi-party computation (MPC) technology for enhanced security.
