Crypto-Backed Loans
If you hold Bitcoin, Ethereum, or other major cryptocurrencies, you don’t need to sell to access liquidity. A crypto-backed loan lets you borrow against your digital assets while keeping your position intact – avoiding a forced sale and the tax event that can come with it.
At a Glance
| Minimum loan size | Typically from around £100,000 for traditional private lending; on-chain platforms have no meaningful minimum |
| Loan-to-value | Commonly around 50% for Bitcoin and Ethereum; ranges from as low as 10% for volatile coins up to 70% for the most established assets |
| Eligible collateral | Bitcoin and Ethereum most commonly; Solana, Litecoin, Cardano, and major stablecoins with some lenders |
| Typical loan term | From several weeks up to around two years on traditional facilities, depending on lender and exit strategy |
| Speed | Underwriting is often faster than conventional lending; on-chain platforms can disburse funds within minutes |
| Regulatory status | Generally unregulated borrowing in the UK |
Two Genuinely Different Ways to Borrow Against Crypto
It’s worth understanding this distinction clearly before comparing rates alone, since the two models work in fundamentally different ways.
Traditional Private Lending
Arranged through a specialist lender or private bank, with your crypto assessed individually, custody held by the lender or a regulated custodian, and terms negotiated to your specific circumstances. This route suits larger facilities, genuinely bespoke structuring, and borrowers who want a proper underwriting relationship rather than an automated process.
On-Chain, Algorithmic Lending
A genuinely newer route has emerged through platforms offering instant, protocol-based lending directly against crypto holdings, with funds disbursed within minutes rather than days. This works through decentralised lending protocols running on blockchain infrastructure, with your collateral converted and held in a smart contract rather than by a traditional custodian. It’s fast and requires no conventional underwriting, but it’s worth understanding that liquidation in the event of a margin shortfall can also happen considerably faster and with less human discretion than a traditional lender would apply.
How Much You Can Borrow
The amount available depends heavily on which specific coin you’re pledging. Bitcoin and Ethereum, being the most liquid and widely accepted, commonly support an LTV around 50% – so a portfolio valued at £200,000 might support a £100,000 loan. More volatile or less established coins are treated far more cautiously, sometimes as low as 10%, and many lenders won’t accept them as collateral at all. Larger crypto portfolios, running into several million pounds, can support proportionally larger facilities through specialist lenders experienced in seven and eight-figure crypto-backed lending.
Why Few Mainstream Banks Offer This
High street banks remain largely absent from traditional crypto-backed lending, not from lack of interest, but because their compliance and anti-money-laundering frameworks are built around standard asset classes like property and listed securities, and documenting source of funds for cryptocurrency remains genuinely difficult for them. This is why the market is served by specialist and boutique lenders, alongside newer on-chain platforms, rather than mainstream institutions.
Why Speed of Liquidation Genuinely Matters Here
It’s worth understanding this risk clearly: crypto markets can move considerably faster than equity or property markets, and some lenders, particularly on-chain platforms, give borrowers only hours to respond to a margin call before automatic liquidation is triggered. This is genuinely different from a traditional stock loan or mortgage, where you’d typically have days or weeks to respond. It’s worth choosing a lender that provides proactive, early-stage alerts rather than only a final liquidation notice, and borrowing meaningfully below your maximum available LTV to build in a genuine buffer.
What Happens if the Value of Your Crypto Falls
If your pledged cryptocurrency falls significantly in value, the lender will typically require additional collateral to restore the agreed loan-to-value – a margin call. If you can’t provide this within the required timeframe, the lender may partially liquidate your pledged assets. Exact thresholds and response windows vary considerably by lender and custody arrangement, and this is precisely why understanding your specific platform’s liquidation process before borrowing matters more here than with most other forms of secured lending.
What Proceeds Are Used For
Common uses include funding a UK property purchase, refinancing existing liabilities, business investment, working capital, or general liquidity management, without triggering a capital gains liability on an appreciated holding the way an outright sale would.
Custody Arrangements
On a traditional facility, your pledged cryptocurrency is typically held by the lender or a specialist custodian for the loan term and returned once the balance is repaid in full. On an on-chain facility, your collateral is instead held within a smart contract on the underlying blockchain protocol – worth understanding this genuine structural difference, since it changes who and what you’re actually trusting with your assets during the loan term.
Tax Considerations
Borrowing against cryptocurrency isn’t itself a disposal for capital gains tax purposes in most straightforward cases – no CGT arises simply from pledging crypto as collateral. However, it’s worth understanding that tax treatment can genuinely depend on the specific mechanics of the loan: whether assets are transferred, exchanged, wrapped into a different token format, moved between entities, or structured through a DeFi-style arrangement can all affect the position. Given how actively HMRC’s approach to cryptoasset taxation continues to develop, it’s worth taking current, qualified tax advice specific to your exact structure; we are lending specialists, not tax advisers.
Related Securities Lending Products
If you hold both crypto and conventional investments, it’s often worth comparing this against our Stock Loans and Lombard Loans pages. If your wealth also includes equity in a private company, our Pre-IPO Loans and Unlisted Stock Loans pages cover borrowing against that kind of holding specifically.
Comparison With Traditional Securities Lending
| Crypto-Backed Loan | Stock Loan | Lombard Loan | |
| Collateral | Bitcoin, Ethereum, select others | Listed equities | Diversified portfolio |
| Typical LTV | ~50%, range 10-70% | 45-65% | Up to 65% |
| Speed | Minutes to weeks, depending on route | Days to weeks | 1-3 weeks |
Using Proceeds for a UK Property Purchase
Our High Value Mortgages page covers how larger UK property transactions are generally assessed, relevant if you’re combining crypto-backed proceeds with conventional property finance.
Our Process
- Initial consultation – we discuss your holdings, amount, and intended use of funds
- Collateral assessment – we confirm which assets are acceptable to lenders and at what LTV
- Lender matching – we approach specialist providers genuinely suited to your coins and amount
- Custody and documentation – we manage the transfer and finalise terms
- Funding – funds are typically released quickly once confirmed
Frequently Asked Questions
What’s the minimum loan size?
Typically from around £100,000 for traditional private lending, though on-chain platforms have no meaningful minimum given their automated, protocol-based structure.
Which cryptocurrencies can I use?
Bitcoin and Ethereum are most widely accepted; some lenders also accept Solana, Litecoin, Cardano, and major stablecoins.
What’s the difference between traditional and on-chain crypto lending?
Traditional lending is arranged through a specialist lender or private bank with negotiated terms and human underwriting; on-chain lending uses automated blockchain protocols, disbursing funds within minutes but with faster, less discretionary liquidation if a margin call isn’t met.
Does borrowing against crypto trigger a tax event?
Not in most straightforward cases – though the specific mechanics of the loan, including whether assets are wrapped or moved between entities, can affect the position, so it’s worth taking specific tax advice.
How quickly could I lose my collateral if the market moves against me?
This varies considerably by lender – some on-chain platforms allow only hours before automatic liquidation, while traditional lenders typically provide more time and proactive warning.
Why don’t mainstream banks offer this?
Their compliance frameworks are built around traditional asset classes and haven’t yet fully adapted to digital assets.
Get in touch with details of your crypto holdings and funding requirements, and we’ll help you understand whether a traditional or on-chain route genuinely suits your circumstances.
