Bitcoin-backed lending is moving beyond its traditional connection to crypto trading, with borrowers increasingly using BTC collateral to cover everyday financial needs.
Two established lenders told CoinDesk that customers are taking out bitcoin-backed loans to pay for college tuition, manage temporary cash shortages, fund businesses and handle unexpected expenses. The trend suggests that crypto-backed credit is beginning to resemble conventional lending.
Hunter Albright, chief revenue officer at SALT Lending, said the company is seeing more customers borrow against their bitcoin for practical, real-world purposes.
“What I am seeing, both in the conversations I’m having and in the data, is that more people are starting to borrow against their Bitcoin for real-world needs,” Albright said. He pointed to emergency expenses and major financial decisions, including college tuition and expensive trips, as well as customers using loans to supplement their cash flow.
The growing use of bitcoin as loan collateral represents a shift in how the asset is viewed. Rather than treating BTC solely as a speculative investment, holders can use it to obtain credit while retaining exposure to the cryptocurrency.
SALT launched its bitcoin-backed lending business in 2016, initially serving bitcoin miners that earned BTC for validating transactions. Its customer base has since expanded to include institutional borrowers, along with Gen X and baby boomer bitcoin holders who want assistance understanding how these loans work.
SALT has not disclosed the total amount it has lent historically. The broader centralized crypto lending market, however, has reached significant scale.
Ledn, which launched in 2018, has funded more than $11 billion in loans so far. The company expects that amount to eventually reach $1 trillion as demand grows for borrowing that is not directly related to trading.
Ledn co-founder and CEO Adam Reeds said the lender serves a wide range of borrowers, including traditional investors, entrepreneurs looking for working capital and institutional customers.
Private wealth clients generally take larger loans for investments, real estate, business needs and their children’s education, Reeds told CoinDesk. Retail borrowers tend to take smaller amounts for immediate expenses, such as covering a month of costs when their primary income is insufficient.
Keeping BTC While Accessing Cash
The central appeal of bitcoin-backed lending is that borrowers can access liquidity without selling their BTC and giving up potential future gains.
Albright said that principle has remained at the center of SALT’s business since its launch.
“We don’t believe people should have to sell their most valuable assets to get the value out of it,” he said.
Ledn customers follow a similar strategy. Reeds said borrowers generally believe bitcoin will appreciate and want to maintain ownership of their holdings.
That outlook also encourages customers to extend their loans.
“Most clients renew their loans, because the whole premise of this type of lending is not selling bitcoin and continuing to hold the position,” Reeds said.
Albright described the trend as a broader democratization of financial strategies traditionally used by wealthy investors and large corporations.
“Now, that is becoming available to a broader group of people based on the asset they own and hold,” he said.
Lenders Push for More Predictable Rates
As bitcoin-backed credit becomes more mainstream, lenders are also looking to reduce uncertainty around borrowing costs.
SALT wants its future products to operate more like traditional mortgages, offering fixed rates and longer repayment periods.
“Our ultimate goal is to have loan products behave much more like a mortgage, where someone can take out a loan, at a fixed rate over a longer term and have greater predictability around the cost of borrowing, even while Bitcoin remains volatile,” Albright said.
The industry has already begun moving in that direction. Coinbase introduced fixed-rate bitcoin-backed loans to its retail app on Sept. 22 through Morpho’s Midnight protocol.
Customers can borrow USDC against bitcoin with the interest rate and repayment date established when the loan begins. The fixed-rate products are offered alongside Coinbase’s existing variable-rate loans on Morpho, which have more than $1.4 billion outstanding against approximately $3 billion in collateral.
Coinbase’s fixed-rate loans currently have shorter terms, while SALT is targeting longer-duration products.
Gold May Become the Next Major Collateral
Ledn expects the same model to eventually extend beyond bitcoin to other hard assets, with gold emerging as a potential next step.
“The next stage is lending against hard assets more broadly,” Reeds said, describing precious metals as a natural progression.
Gold is particularly notable because it is a roughly $20 trillion asset, yet borrowing against it has historically been more accessible to institutional investors. For everyday holders, selling gold has generally been the primary way to convert it into cash.
As collateral-based lending develops, the distinction between digital and traditional alternative assets could continue to narrow.
“Our clients increasingly think in terms of hard assets they want to hold for the long term, and borrow against rather than sell,” Reeds said.
