Cryptocurrency Loans Guide

Last updated on 16th March 2021

The benefits of cryptocurrency loans are not to be overlooked. They are near instant and you can pay them back on your own time. You get the desired credit limit without statement deadlines. The credit goes directly to your crypto wallet. Crypto loans are getting bigger and bigger. You can trade for many times your total assets and at the end of the day, all you need is a positive balance. There is no settlement delay. What’s not to love about them?

As always, the devil’s in the details. We provide a comprehensive overview of crypto loans in our informative, yet concise guide.

Cryptocurrency Loan as an Investment: What do You Need to Know?

If you’re considering a cryptocurrency loan as an investment, you must seek collateral offered against the loan. Normally, the loan value should be less than that of the collateral. These loans are typically in Bitcoin and Ethereum, but there are other options. The loan to value (LTV) ratio is very important. An LTV of 50% means the value of the loan received is 50% of the value of the collateral offered. Lenders can sustain losses due to cryptocurrency collateral value fluctuations.

Can You Legally Loan Cryptocurrency?

You can and you should, but these loans aren’t always legal. Sometimes you don’t even need to sign anything. It generally depends on the country. Cryptocurrency is illegal in countries like India, Algeria, China, and Morocco. US citizens can loan cryptocurrency legally, but the regulatory environment is complex, which is why loan providers generally prefer to stay away from the US.

What’s more, these loans might be taxed because the IRS doesn’t view cryptos as currency, but as property. Why? When you get a loan in cash, you pay it back with other money. This isn’t true with property. If you borrow a car from someone, you can’t return a different one. The person who lent you the car might see this transaction as the sale of their car for tax purposes, after which you bought another one.

Makes Sense, No?

It’s easy to see how faulty this logic is. Just like you never set foot in the same river twice, you never give the exact same money back. One needs to account for things like inflation and fluctuating exchange rates. It’s often the case that tax officials will defy logic in an attempt to collect as much in taxes as they can. With the exception of Section 1031 exchanges and other specific tax provisions, you owe tax on practically everything you trade. With cryptocurrency loans, the parties involved usually don’t wish to treat the money lent as property, but as fungible currency. The outcome doesn’t depend on them.

Types of Cryptocurrency Loans

You can take out a loan secured by cryptocurrency (cryptocurrency asset/equity loan) and use cryptocurrency as loan collateral. Fiat cryptocurrency loans are available in multiple currencies, including USD, EUR, GBP, and CHF. Another option is loans backed by staking, where you can stake coins like ADA, DASH, DOT, XTZ, etc. as loan collateral.

Business Loan to Start Cryptocurrency Mining

Providers like BlockFi and Babel Finance offer such loans. For example, Babel Finance accepts equipment as loan collateral from mining firms. There is a 30% loan-to-value ratio on these loans. Babel keeps the mined products until the loan is repaid. Loans allow miners to buy new equipment and pay their electric bills. They’re not very willing to give up their mined cryptocurrency in a bull market.

Loan for Equipment

Providers like Celsius Network offer loans for equipment against cryptos. In the middle of last year, they announced they were accepting 26 different cryptos as collateral. At present, every asset the CN wallet accepts is accepted as collateral for a loan of fiat money or stablecoins. Among the assets accepted are USDT, GUSD, TUSD, PAX, and other stablecoins and altcoins like XLM, ZRX, and DASH. CN also accepts CEL, their very own native token.

Cryptocurrency Loan for Business

SMEs traditionally struggle to obtain financing, especially now with the pandemic. Conventional lenders are enforcing stricter and costlier policies. BlockFi and other untraditional lenders offer businesses that have access to cryptocurrency assets new and excellent opportunities to obtain fiat. Companies that accept cryptos as payment and ICOs can get loans in US dollars or other fiat currency using crypto as collateral. Crypto loans for business are very beneficial for companies with low net income because collateralized loans minimize the income that appears on tax declarations. They also put a lower strain on profit.

Property Purchase or Renovation Loan

Bitcoin increased from $30,417 for 1 BTC on January 27 to almost $48,000 on February 9, 2021. Understandably, many BTC holders want to include real estate into their portfolio. Some investors want to purchase a rental property. Others want to buy a second home. Still others want to renovate. Cashing out might seem like an obvious decision to make. However, the wish to maintain a long-term position or tax liability can prevent an investor from making it. Loan providers like Unchained Capital and others give loans for real estate purchases with BTC as collateral. This makes it possible to buy a home or renovate an existing property without the complexity of contingencies. These loans come with much better rates than traditional loans and no extensive underwriting is required.

Student Loan

Some college students are opting to purchase cryptocurrencies with their loans rather than spending them on living costs or supplies. In fact, a recent study showed that more than 20% of students used their loans to invest in digital currency. Federal loan recipients sometimes have excess funds, which they decide to invest. Gains from digital currency are possible, while losses can add to existing college debt.

High Interest Short-term Loan

Let’s take Bitcoin as an example. Bitcoin loans can come with simple or compound interest. The latter is added to the deposit periodically, which is one main difference. The platform determines how often this interest is added. It can be once every three months, once a monthly, daily, or weekly. Lenders enjoy higher returns from charging compound interest. An important aspect to consider is the APY or Annual Percentage Yield, which practically gives you the amount you’ll earn in one year with compound interest. The formula is APY = (1 + r/n) exponent n – 1. The higher the APY value, the better for the lender.

A crypto asset-backed loan allows for diversification of cryptocurrency investments in a bull market of the loan collateral. If price goes up, you get back part of your collateral during the loan term.

Which Cryptocurrencies can I Pledge to get a Fiat Loan?

It depends on the platform, but BTC and stablecoins are preferred. Bitcoin has become well-established, and stablecoins are pegged to fiat, which guarantees stability.

What Coins can I Borrow?

Generally, borrowers will get loans in Ethereum, then use them to trade against other cryptos on different exchanges. Ethereum is an extremely popular crypto, second only to Bitcoin in market capitalization rate. Ethereum’s decentralization is its unique selling point. The ETH network’s innumerable tokens facilitate crypto economy growth like nothing else. For example, the ERC platform supports more than 90% of all tokenized projects. The profits from ETH loans are very impressive, comparable to those made on stock markets by short sellers. You can borrow any coin you want, but ETH is best.

How to Borrow Cryptocurrency

You can borrow cryptocurrency as a natural person, a judicial person, or a miner. The loan interest rate and term is determined by the lending site. The rates for borrowers and lenders normally differ. For the former, they tend to be low to encourage loan applications. Flash loans are a case in point. You can get a loan without collateral and use it for whatever you want. One lucrative option is mediating coin price discrepancies on different exchanges. The same transaction block being processed on ETH’s ledger contains the trade, the loan, and the repayment. All of these are executed at the same time. It takes mere seconds to borrow and repay a loan.

Before you can borrow cryptocurrency, the lending platform will need to verify your identity. Then, you view the agreement terms. Typically, loan duration is 12 months, but it can be more or less. Regardless of what loan you choose, it’s always at the lender’s disposal as far as the blockchain is concerned. You can reject any unprofitable transaction. If you do, the funds are returned to the lender.

How to Lend Cryptocurrency

Cryptocurrency loans connect lenders to borrowers just like peer to peer lending. Loan providers can lend at a fixed rate set by the respective platform, but generally, they’re free to decide on the terms. You start by opening an account on a lending platform. This usually takes a few minutes and there’s no charge. You select your crypto and loan amount and make a deposit. Most lending sites will ask you to undergo identity verification. The rates of those that won’t are usually inflated.

Once the borrower pays you back, your assets are returned. Some loans are backed by other cryptos, while others are backed by real estate or another physical asset. Why would you want to lend cryptocurrency? One reason is margin lending. When you give someone a loan and they believe a certain crypto’s value will increase, they will ask to lend part of the funds you lent them. Soon thereafter, they’ll pay you back with interest.

Cryptocurrency Loan Companies

In this section, we cover some of the most popular companies in the sector, such as BlockFi, Nexo, Binance, SaltLending, and Bitcoin IRA.


Blockfi crypto loans companyVisit Website

Kinds of Loans

Loan recipients provide collateral in ETH or BTC on BlockFi. You enter the collateral to be deposited or the cash amount you want. Interest rates start at 3.2%. All loan terms are up to a year. At the end of this term, the borrower pays off the principal amount. No penalty is charged on early repayment. If you find yourself struggling, it’s possible to refinance your loan at the end of the loan term. BlockFi is the only platform that offers a compound-interest deposit account. This is a good feature for lenders. They make more money because their interest compounds to the original amount on a monthly basis.

Supported Coins

BlockFi supports multiple cryptocurrencies, including BTC, ETH, LTC, USDC, and GUSD.

Supported Fiat Money


Supported Countries

BlockFi services businesses and individuals worldwide, including in each US state.


Binance Bitcoin and crypto loansVisit Website

Kinds of Loans

In your Binance account, you secure a collateral amount to borrow USDT or BUSD against. There are different loan terms, ranging from a week to three months. If you agree to the repayment amount and collateral, you’re welcome to withdraw the loan and use it for anything you wish. Rates on loans in BUSD are lower. You can get up to two-thirds of the value of the loan collateral.

Supported Coins

Binance supports BTC, BCH, XRP, ETH, EOS, and LTC as collateral assets.

Supported Fiat Money

USD, EUR, GBP, and a few others are supported.

Supported Countries

Binance is available to users in almost 200 countries worldwide. Investors from the US can trade cryptocurrencies on Binance. The platform is even accessible in countries like India and Sudan, where cryptos are illegal.


Nexo cryptocurrency-backed loansVisit Website

Kinds of Loans

Nexo allows owners of cryptocurrency assets to use them as collateral for cash loans. The loan doesn’t lead them to lose their assets.

Supported Coins

The exchange supports BTC, ETH, LTC, BNB, PAXG, XRP, XLM, NEXO, LINK, TRX, BCH, EOS, and stablecoins.

Supported Fiat Money

EUR, GBP, and USD.

Supported Countries

Nexo does not provide services to customers in Afghanistan, CAR, Myanmar, Bulgaria, Cote d’Ivoire, Cuba, Estonia, Iraq, Democratic Republic of Congo, Eritrea, Iran, Libya, Lebanon, Somalia, Sudan and South Sudan, North Korea, Syria, Republic of the Congo, Sierra Leone, Syria, Zimbabwe, and Yemen.


SaltLending crypto-backed loansVisit Website

Kinds of Loans

SaltLending doesn’t require you to give your position up in order to profit from your cryptocurrency assets. They offer cash loans with blockchain assets as collateral. Any asset holder can earn interest, lend assets to anyone else, and regain ownership once the loan has been repaid. The platform does not charge origination or prepayment fees. The interest rate is subject to agreement between the parties. They only look at the value of your assets to decide on loan eligibility. No risk is involved because smart contracts secure all loans.

Supported Coins

The platform supports Bitcoin, Dogecoin, Litecoin, and Ethereum.

Supported Fiat Money


Supported Countries

The platform services loans in Brazil, Hong Kong, United Arab Emirates, Vietnam, New Zealand, Puerto Rico, Switzerland, the UK, and select US states.

CoinLoan cryptocurrency-backed loansVisit Website

Kinds of Loans

CoinLoan offers up to 10.3% annual ROI on its crypto-backed loans. Their loan terms are comparatively long, with durations of up to three years. Of course, that’s not the only option. You can get a loan with a term of just a week. The minimal investment is EUR 100. You can repay the loan at any time.

Supported Coins

CoinLoan supports BTC, ETH, LTC, and XMR.

Supported Fiat Money and Stablecoins


Supported Countries

CoinLoan’s products are available globally with a few restrictions. As a rule of thumb, the provider doesn’t offer services in countries or territories associated with excessive compliance risks. loansVisit Website

Kinds of Loans

The premise is very basic: you just deposit a select crypto and are asked to accept the terms. doesn’t charge late fees because repayment schedules are not fixed. Interest ranges from 8% to 12%. One year is the longest loan term.

Supported Coins

Your options on include BTC, EOS, XRP, CRO, LTC, ETH, or XLM.

Supported Fiat Money


Supported Countries

The full list is available here.

Bitcoin IRA

Kinds of Loans

Bitcoin IRA introduces a unique concept: it lets you earn money in your retirement account with a crypto loan. More specifically, you can earn up to 6% interest. The platform offers 100x higher APY, no lockup period, low minimums, and monthly payouts. You will accrue earnings daily and they will be paid to your retirement account directly each month. This is a good option for people who want to maximize their retirement funds. You can start or close your position whenever you want, which means your assets will be generating interest all the time. With Bitcoin IRA, you’re eligible for the same competitive rate no matter what your investment amount is. As little as ten thousand will work.

Supported Coins

Bitcoin IRA supports ETH, BTC, XRP, XML, LTC, ZEC, ETC, BCH, and Digital Gold (DG). You can invest in multiple coins or just one.

Supported Fiat Money


Supported Countries

All except those that have a ban on BTC, obviously, like China, Russia, Vietnam, Bolivia, Columbia, and Ecuador.

Best Cryptocurrency Loan

Provider Min amount Max amount Currencies LTV APR Rating
Nexo USD 500 USD 2 M BTC, ETH, XLM, XRP 50% 5.9% 5/5
Blockfi USD 5,000 No maximum BTC, ETH, LTC 20% Starts at 3.2% 5/5
AAVE No minimum No maximum SNX 0% 7.74% 5/5
SaltLending USD 5,000 No maximum SALT 30% – 70% Starts at 5.95% 4/5 EUR 100 No maximum BTC and ETH 60% 4.5% 4/5

Cryptocurrency Loan Accounting

No accounting standards address crypto assets specifically, which is why accountants look at the International Financial Reporting Standards (IFRS). The approach used is based on principles. Two of the applicable standards are IAS 2 and IAS 38. As the terms ‘cash’ and ‘currency’ aren’t defined by IFRS, the conclusion has been reached that they are interchangeable for accounting purposes. Across the board, the adjusted cost base is used to calculate capital gains and losses. This is essentially the average value of the cryptos an investor has acquired, from beginning to end. The cost base must be calculated for each type if you’ve invested in more than one coin.

Against the backdrop of all this complexity, there is an obvious need for specially designed software. The best software gathers data on transactions from different crypto exchanges and helps generate tax returns based on the respective legal framework and data logged. Cryptocurrency tax software takes transaction data from platforms and exchanges and calculates the tax. Understandably, crypto loan investors find these products to be of essence to their operations. Some of the best ones are Bitcoin Taxes, Blox, Koinly, TAXbit,, SoftLedger, and ZenLedger.