Comprehensive Guide to Borrowing Against Crypto

The ability to borrow against your crypto holdings has become a game-changer for investors and enthusiasts in recent years. Whether you want to leverage your digital assets for financial opportunities or need quick access to funds without selling your crypto, the right platform can make all the difference. In this comprehensive guide, we explore the best platforms to borrow against crypto, offering detailed insights into the world of crypto loans, their benefits, and where you can find the most reliable options to meet your financial needs.

How Do Crypto Loans Work?

Crypto loans fall into two main categories: custodial and non-custodial. Custodial loans involve a central entity holding your collateral and controlling your assets' private keys, which limits your direct access to the funds. In contrast, DeFi (Decentralized Finance) loans use smart contracts to enforce loan terms, allowing you to maintain control over your assets unless you default on the loan. Decentralized loans offer greater transparency and autonomy, though they often come with higher interest rates due to the decentralized nature of the lending process.

Unlike traditional loans from banks or financial institutions, crypto loans don't require credit checks or extensive documentation. The collateral, usually cryptocurrency such as Bitcoin or Ethereum, secures the loan, and the platform automatically enforces loan terms through smart contracts or automated systems. Over-collateralization is a common practice in the crypto lending space to protect lenders and reduce the risk associated with market volatility. This means borrowers typically need to deposit crypto assets worth more than the loan amount they wish to receive.

There are also crypto loans without collateral, known as flash loans. These innovative financial instruments involve borrowing and repaying tokens within seconds, all within a single blockchain transaction, typically used for specific arbitrage or trading strategies. However, borrowers should be cautious and conduct thorough research, as this space is still evolving and can attract scammers. If an offer seems too good to be true, it probably is, and due diligence is essential before engaging with any lending platform.

What Are the Best Platforms To Borrow Against Crypto?

1. Figure Markets

APR: 8.91% LTV ratio: Up to 90% Assets: BTC/ETH/SOL Loan term: 12 months

Figure Markets is a distributed custody exchange offering zero-fee trading, regulated yield products, and transparent borrowing solutions. The company was founded by June Ou and Mike Cagney, who is also the co-founder of SoFi, one of the largest fintech loan companies in the United States. This strong background in traditional finance brings credibility and expertise to the crypto lending space.

Figure Markets allows you to borrow cash using BTC, ETH, and SOL as collateral without requiring a credit score, and with completely transparent terms. The platform provides a comprehensive solution where you can borrow, earn, and trade, all from within the same account, making it a convenient one-stop solution for crypto financial services. The high LTV ratio of up to 90% for qualified borrowers makes it particularly attractive for those seeking maximum liquidity from their crypto holdings.

Pros

• Borrow without selling your ETH, BTC, or SOL holdings
• Instant liquidity access for urgent financial needs
• No repayment penalties or rehypothecation of assets
• Borrow up to 75% LTV (up to 90% for qualified users)
• Transparent fee structure and loan terms

Cons

• Limited to BTC, ETH, and SOL as collateral options
• Geographic restrictions may apply depending on regulatory requirements

2. Wirex

APR: 2% LTV ratio: Up to 70% Assets: 25+ Loan term: Flexible

Wirex Credit empowers you to access credit without the need to sell your cherished crypto assets, allowing you to maintain your long-term investment positions. You can borrow stablecoins by pledging your BTC or ETH as collateral, providing you with liquid funds while keeping your crypto exposure. The platform offers flexibility in repayment terms, with interest only accruing on active days, which can significantly reduce your overall borrowing costs compared to traditional loan structures.

Wirex also provides a convenient in-app loan health checker that lets you monitor your loan's status in real-time. This feature allows you to easily assess your loan-to-value ratio and receive immediate notifications of any changes, providing you with complete transparency and control over your finances. The ability to track your loan health helps you avoid liquidation risks and manage your collateral effectively.

Pros

• Interest starting at 0% for qualified borrowers
• Instant approvals with minimal documentation
• Digital assets held in secure cold storage for maximum security
• Real-life stablecoin spending through integrated payment solutions
• Support for 25+ different crypto assets as collateral

Cons

• High fees for exchanging between crypto and fiat currencies
• Need to complete KYC (Know Your Customer) verification to access account features

3. Coinbase

APR: 8.7% LTV ratio: Up to 40% Assets: 1 (Bitcoin) Loan term: Flexible

Coinbase offers a unique opportunity to borrow cash against your Bitcoin holdings without selling them, thus avoiding potential taxable events that would occur if you liquidated your crypto assets. With an LTV ratio of up to 40% and a substantial loan limit of $1,000,000, Coinbase is a valuable tool for those needing urgent cash without liquidating their crypto investments. The platform ensures a straightforward process with no hidden fees or credit checks, making it accessible to a wide range of borrowers.

The service offers a seamless process for accessing borrowed funds, with convenient options to have cash instantly deposited to PayPal or transferred via ACH (Automated Clearing House) to your bank account within business days. It also provides a flexible repayment plan, allowing you to manage your finances effectively without the pressure of rigid repayment schedules. This flexibility is particularly valuable for borrowers who want to time their repayments strategically based on market conditions or personal cash flow.

Pros

• Competitive APR of 8.7% for crypto-backed loans
• No need to sell Bitcoin, preventing taxable gains or losses
• No additional fees or credit checks required
• Instantly deposit borrowed cash to PayPal or bank account
• Flexible repayment schedule tailored to borrower's convenience
• High borrowing limit up to $1,000,000 for qualified users
• Trusted platform with strong regulatory compliance

Cons

• Limited to Bitcoin as collateral (no support for other cryptocurrencies)
• Lower LTV ratio compared to some competitors

4. YouHodler

APR: 3%-26% LTV ratio: Up to 97% Assets: 50+ Loan term: Up to one year

YouHodler is a custodial crypto lending platform that offers fast crypto borrowing services with an extensive selection of supported assets. With a choice of over 50 cryptocurrencies to use as collateral, borrowers can access loans worth up to 90% of their collateral's value, depending on the specific asset provided. The platform is particularly notable for offering up to 97% LTV when depositing Bitcoin as collateral, which is among the highest in the industry and allows borrowers to maximize their liquidity while maintaining their crypto positions.

The exact LTV ratio and loan asset offered depends on the specific collateral provided, with more established cryptocurrencies typically offering higher LTV ratios. YouHodler also provides advanced trading tools and features that allow users to optimize their crypto strategies while managing their loans, making it a comprehensive platform for active crypto users.

Pros

• Advanced trading tools for active crypto traders
• Good customer service with responsive support team
• Fast borrowing process with quick approval times
• Support for 50+ cryptocurrencies as collateral
• Very high LTV ratios, especially for Bitcoin (up to 97%)

Cons

• Unavailable in the United States due to regulatory restrictions
• High APRs on loans, ranging up to 26% depending on terms
• Wide interest rate range can make cost comparison difficult

5. Nexo

APR: 0-15.9% LTV ratio: Up to 90% Assets: 60+ Loan term: Flexible (up to one year)

Choose Nexo to borrow against your crypto if you want simplicity and accessibility combined with competitive rates. The platform operates with no applications or credit checks; you qualify based solely on your deposited assets, making it one of the most accessible crypto lending platforms available. You can borrow as little as $50 for stablecoin loans or $500 for fiat loans, with daily limits of up to $2 million for high-volume borrowers, providing flexibility for both small and large borrowing needs.

Interest rates vary significantly from 0% for Platinum loyalty tier users with low Loan-to-Value ratios to 15.9% for base users with higher LTVs, creating strong incentives for users to maintain higher loyalty levels. Nexo also provides flexibility with no prepayment fees, allowing you to repay your loan early without penalty, although repaying within 30 days may result in a slightly higher effective interest rate. Your borrowing capacity depends on the quality and quantity of your collateral assets, and you can easily monitor your available credit on your dashboard in real-time.

Pros

• Instant access to Nexo Borrow with no waiting period
• Nexo Pro platform for precision trading with low fees
• Free withdrawals (limited by loyalty level tier)
• Support for 60+ cryptocurrencies as collateral
• Interest rates as low as 0% for qualified users
• No prepayment penalties

Cons

• NEXO token requirement to qualify for higher loyalty levels and better rates
• Several key products not available in major markets such as the United States
• Minimum withdrawal limits (0.001 BTC, 0.01 ETH) may be restrictive for small users

6. Leading Crypto Exchange Platform

APR: Up to 20% LTV ratio: Up to 70% Assets: 300+ Loan term: Up to 180 days

This major trading platform is flexible and allows you to choose from various loan terms including seven, 14, 30, 90, and 180 days, with interest calculated hourly for maximum transparency and accuracy. You can repay your loan early without penalty fees, providing flexibility to optimize your borrowing costs based on market conditions or personal cash flow. The borrowed funds can be utilized across the platform's extensive ecosystem for trading, staking, or other activities, or withdrawn for external use in other investments or personal expenses.

Additionally, this platform offers the unique option to stake your collateral while it secures your loan, allowing you to generate crypto rewards and reduce your effective loan interest fees. This feature enables you to offset borrowing costs with staking rewards, making it a more economical option for long-term borrowers. It's a convenient and versatile platform for borrowing crypto funds with extensive asset support covering over 300 different cryptocurrencies.

Pros

• Access loans instantly with automated approval
• Borrowers get lower interest rates with crypto-secured loans
• Flexible loan terms from 7 to 180 days
• Ability to stake collateral and earn rewards
• Support for 300+ cryptocurrencies as collateral
• Hourly interest calculation for accuracy

Cons

• Lower LTV ratio (70%) compared to some other loan platforms
• 2% late repayment fee can add significant costs
• Higher maximum APR of 20% for some loan terms

7. Bake

APR: 5% LTV ratio: 50% Assets: DUSD (DeFiChain USD stablecoin) Loan term: Flexible

Bake is an attractive platform for borrowing crypto, particularly for users seeking stablecoin loans. You can borrow DUSD, a decentralized stablecoin, and use various cryptocurrencies including BTC, ETH, DFI, USDT, or USDC as collateral. The platform requires over-collateralization to ensure the safety and security of your loan, protecting both lenders and borrowers from market volatility risks.

There are no strict loan terms or mandatory repayment dates, allowing maximum flexibility in loan duration based on your individual needs and market conditions. The fees are competitive and transparent, including a 5% APR interest rate and a 0.5% origination fee charged at loan initiation. Importantly, Bake provides a mechanism to prevent liquidation, allowing borrowers to top up their collateral if the value drops, giving you control over your loan health and avoiding forced liquidation in volatile markets.

Pros

• Customer deposits are kept separate from company funds for security
• Loans are flexible with no fixed repayment dates
• Interest is paid only when you close the loan, not accrued daily
• Liquidation prevention mechanism through collateral top-ups
• Support for multiple major cryptocurrencies as collateral

Cons

• 0.25% deposit fee for adding collateral
• Only one asset available to borrow (DUSD stablecoin)
• Lower LTV ratio (50%) compared to other platforms
• Limited borrowing options may not suit all users

Can I Get a Loan With Crypto?

Yes, you can absolutely get a loan with crypto assets. Numerous platforms allow you to use your cryptocurrency as collateral to borrow money or stablecoins, providing liquidity without requiring you to sell your digital assets. This means you don't have to liquidate your crypto holdings and can access funds while keeping your digital assets, allowing you to maintain your investment positions and benefit from potential future appreciation.

The process typically involves depositing your cryptocurrency into a lending platform, which then provides you with a loan based on the value of your collateral. However, it's important to remember that crypto loans usually involve certain terms and conditions, such as repaying the loan with interest within specified timeframes and maintaining sufficient collateral to cover the loan value. If the value of your collateral drops significantly, you may face margin calls or liquidation. So, while it's certainly possible and increasingly popular, make sure you thoroughly understand how crypto loans work, including the risks involved, before committing to a crypto loan.

Here is how to get a crypto loan:

• Choose a reputable crypto lending platform and create an account by completing the KYC (Know Your Customer) verification process
• Deposit collateral by transferring your chosen cryptocurrency assets to the lending platform's secure wallet
• Apply for a loan by selecting the loan amount, term, and repayment structure you want
• Receive funds in the form of cryptocurrency, stablecoins, or fiat currency, depending on the platform
• Use the funds for trading, investment, business expenses, or other financial needs
• Monitor your collateral ratio regularly to ensure it remains above the required level to avoid liquidation
• Repay the loan principal and accumulated interest according to the agreed schedule, and your collateral will be returned to you in full

Benefits of Getting a Crypto Loan

Taking out a loan with crypto offers several unique benefits that traditional loans from banks or financial institutions may not provide. These advantages make crypto loans an attractive option for cryptocurrency holders seeking liquidity. Here are the key advantages of opting for a crypto loan:

• No credit check: Lenders typically do not require a credit check or credit history verification since you secure the loan with your crypto assets, making it accessible to borrowers with limited or poor credit history.
• Quick approval: You can often get approval and process the loan much faster than traditional loans, sometimes within minutes or hours, rather than days or weeks required by banks.
• Retain ownership: Using your crypto as collateral allows you to retain ownership of your assets and benefit from potential appreciation in value, unlike selling which would eliminate your exposure to future gains.
• Flexible terms: Many crypto lenders offer flexible repayment terms and competitive interest rates tailored to fit your specific financial needs and circumstances.
• Access to liquidity: A crypto loan provides immediate liquidity without forcing you to sell your assets or trigger taxable events, enabling you to leverage your holdings for other investments or expenses while maintaining your crypto positions.
• No geographic restrictions: Many crypto lending platforms operate globally, providing access to loans regardless of your location (subject to local regulations).
• Tax efficiency: Borrowing against crypto instead of selling can help you avoid capital gains taxes, making it a more tax-efficient way to access funds.

Understanding how to take out a loan with crypto and leveraging these benefits helps you maximize the value of your digital assets while maintaining control over your cryptocurrency holdings.

Can I Borrow Crypto Without Collateral?

Yes, you can borrow crypto without collateral, but the availability and terms depend significantly on the lending platform and the type of loan. Some platforms offer unsecured crypto loans where you don't need to provide collateral upfront, but they typically have much stricter eligibility criteria, require extensive verification, or charge higher interest rates compared to collateralized loans to compensate for the increased risk to lenders.

Flash loans are a specialized type of uncollateralized loan that is available exclusively on decentralized applications (dApps) and DeFi platforms. Unlike traditional loans where you need to provide collateral and repay over time, flash loans allow you to borrow cryptocurrency instantly without putting up any collateral at all. However, there's a critical requirement: you must repay the loan with flash loans within the same blockchain transaction you borrowed it in. If you can't repay the loan within that single transaction, the entire transaction is reversed as if it never happened.

This unique mechanism means you need to have a specific, well-planned strategy in place to use the borrowed funds for a profitable purpose within that same transaction. Common use cases include arbitrage opportunities (buying low on one exchange and selling high on another), collateral swapping, or liquidation strategies. Flash loans are a powerful tool for experienced cryptocurrency users to access significant amounts of capital (sometimes millions of dollars) for a very short period, often just seconds.

However, flash loans come with substantial risks and require a deep understanding of blockchain technology, smart contracts, and cryptocurrency markets. They are primarily used by developers and sophisticated traders who can code smart contracts to execute complex strategies. For average users, flash loans may not be practical or advisable without proper technical knowledge.

What Is the Best Platform To Borrow Against Crypto?

Determining the best platform to borrow against crypto requires careful evaluation of various factors, including loan terms, interest rates, collateral requirements, and platform reputation. Different platforms excel in different areas, so the "best" choice depends on your specific needs and circumstances. Some platforms offer the convenience of crypto loans without collateral through flash loans or unsecured lending, making them accessible to a broader audience, though typically with higher costs or stricter requirements.

Additional factors that play crucial roles in choosing the right platform include loan disbursement speed (how quickly you receive funds), the lender's reputation and track record, security measures, customer support quality, and fee structures including origination fees, withdrawal fees, and late payment penalties. The range of supported collateral assets is also important, as some platforms accept dozens of cryptocurrencies while others limit collateral to major assets like Bitcoin and Ethereum.

Ultimately, selecting a platform that aligns with your financial goals, risk tolerance, and specific borrowing needs is key to a successful borrowing experience in the crypto space. Consider factors such as whether you need maximum LTV ratios, lowest interest rates, most flexible terms, or strongest security measures, and choose accordingly. It's advisable to compare multiple platforms, read user reviews, and start with smaller loan amounts to test the platform before committing to larger borrowings.

FAQ

What is crypto lending? What are the advantages of borrowing with crypto assets as collateral?

Crypto lending allows you to borrow funds using cryptocurrency as collateral. Key advantages include competitive interest rates lower than traditional finance, flexible repayment terms, and immediate access to liquidity without selling your assets.

Which cryptocurrencies are supported as collateral by lending platforms?

Leading lending platforms support major cryptocurrencies including BTC, ETH, SOL, BNB, and LINK. Most platforms accept over 15 different digital assets as collateral, providing flexible options for borrowers seeking crypto-backed loans with varying terms.

How do interest rates and fees compare across different crypto lending platforms?

Crypto lending platforms vary significantly in rates and fees. Standard loans typically charge annual interest rates between 10% to 15%, with origination fees ranging from 1% to 3%. Comparing specific platform rates directly is essential for finding the best terms for your borrowing needs.

What security risks should I be aware of when using crypto lending platforms?

Monitor platform legitimacy, security audits, and user reputation. Watch for technical vulnerabilities, smart contract risks, liquidation dangers, and counterparty default. Verify regulatory compliance and use platforms with insurance protection and transparent reserve backing.

What is the collateral ratio for crypto lending platforms? How to avoid forced liquidation?

Collateral ratios typically range from 80% to 150% across platforms. To avoid forced liquidation, maintain collateral value above loan amount and deposit additional collateral when needed to meet minimum requirements.

What are the KYC authentication requirements for lending platforms?

Most lending platforms require basic personal information including name, date of birth, address, and government-issued ID. Some platforms may also request identity document photos. Specific requirements vary by platform and region.

What are the differences between crypto lending and traditional bank loans?

Crypto lending uses blockchain and smart contracts for automation, while traditional bank loans rely on central institutions. Crypto lending offers greater transparency, faster processing, lower fees, and 24/7 availability without credit checks, though it carries higher volatility risks.