Crypto-backed loans allow cash access without selling digital assets

Crypto-backed loans allow holders to access cash using digital assets like Bitcoin, Ethereum, or Solana as collateral without selling their holdings. This method can help investors avoid triggering capital gains taxes and allows them to maintain exposure to future price increases.

Key factors for evaluating these loan products include the maximum loan-to-value (LTV) ratio, whether interest rates are fixed or variable, the lender's regulatory licensing, and liquidation terms. For example, Figure Lending LLC operates as a licensed lender offering fixed rates, while CoinRabbit provides high LTV options ranging from 50% to 90% with rapid funding speeds.

Borrowers should be aware of the risks associated with market volatility. Because these loans are secured by crypto assets, a sharp decline in the value of the collateral can trigger a margin call or liquidation. Some platforms mitigate these risks through real-time position tracking, risk-zone alerts, and segregated cold storage for collateral.