Gibraltar-based Xapo Bank launched a bitcoin-backed loan program allowing customers to borrow up to $1 million in U.S. dollars using bitcoin as collateral. The new service targets long-term cryptocurrency holders seeking liquidity without selling their assets, with loan terms ranging from 30 days to one year and no penalties for early repayment.
Xapo Bank CEO Seamus Rocca emphasized the program’s focus on transparency and trust, contrasting it with what he described as predatory lending practices in some crypto markets. The bank maintains loan-to-value ratios between 20% and 40%, storing collateral securely in institutional-grade multiparty computation custody vaults during the loan period. Bitcoin deposits remain segregated and are not rehypothecated for other purposes.
Excluding customers from the U.K. and Australia due to regional regulations, the service requires pre-approval and links to the bank’s existing cryptocurrency accounts. Xapo holds a banking license from the Gibraltar Financial Services Commission and operates under equivalent regulatory status in the U.K. through passporting arrangements.
The move comes as traditional financial institutions like Cantor Fitzgerald expand into crypto financing, while decentralized platforms like Morpho facilitate lending protocols. Coinbase recently reintroduced bitcoin-backed loans through its Base network after a 2023 pause, offering U.S. customers up to $100,000 in USDC stablecoins. Xapo’s centralized model distinguishes it from decentralized alternatives by maintaining direct custody of collateral and emphasizing regulatory compliance.
Bank officials highlighted bitcoin’s advantages as collateral—including liquidity, divisibility, and 24/7 market availability—while acknowledging borrower responsibilities to monitor collateral value thresholds. The launch expands Xapo’s suite of crypto banking services, which include interest-bearing bitcoin accounts approved for U.K. customers last year.
Sources:
https://www.crowdfundinsider.com/2025/03/237512-xapo-bank-now-offers-usd-loans-backed-by-bitcoin/
https://www.mitrade.com/insights/news/live-news/article-3-707986-20250320
https://www.ainvest.com/news/xapo-bank-launches-bitcoin-backed-loans-expanding-services-2503/
https://cointelegraph.com/news/xapo-bank-bitcoin-usd-loans-long-term-hodler
