Bank Launches Bitcoin-backed USD Loans
Xapo Bank, a globally operating crypto-friendly institution based in Gibraltar, is entering the Bitcoin lending space by introducing U.S. dollar loans backed by Bitcoin.
According to a March 18 announcement shared with Cointelegraph, eligible Xapo Bank clients can now apply for BTC-backed loans of up to $1 million.
This new product is aimed at long-term Bitcoin holders who want access to liquidity without selling their BTC, Xapo Bank CEO Seamus Rocca told Cointelegraph.
“Unlike traditional assets, Bitcoin is an ideal form of collateral — it is borderless, highly liquid, available 24/7, and easily divisible, making it uniquely suited for lending,” Rocca said.
One key feature of Xapo’s lending program is that client BTC collateral will not be rehypothecated.
This means Xapo does not reuse users' Bitcoin in other financial activities.
Instead, Bitcoin used as collateral is secured in Xapo’s BTC vault through institutional-grade multiparty computation (MPC) custody.
Clients who qualify can select repayment terms of 30, 90, 180, or 365 days, with no penalties applied for repaying the loan early, the firm stated.
Xapo’s new Bitcoin loan product is available to pre-approved users who meet specific criteria.
Eligibility is primarily based on the amount of Bitcoin held and the duration of holding, with a particular focus on long-term investors committed to a BTC-focused strategy.
The service is intended for global users, including those in Europe and Asia, but excludes U.S. residents.
Xapo Bank operates under the oversight of the Gibraltar Financial Services Commission via the Financial Services Act 2019.
In 2024, the bank expanded its operations by passporting its license to the United Kingdom, granting the Xapo Bank App full functionality within the country.
While the bank’s lending services are accessible throughout the EU, such crypto loan offerings are not governed by local crypto legislation, such as the Markets in Crypto-Assets (MiCA) regulation.
The launch of Xapo’s BTC-backed loans comes after a period of severe disruption in the crypto lending space, which peaked in 2022.
That year saw a major market downturn following the collapse of Terra, resulting in the failure of major crypto lenders like Celsius and BlockFi.
“The collapse of Celsius, BlockFi, and other centralized lenders significantly eroded trust in the crypto lending space,” Xapo Bank CEO told Cointelegraph.
“Borrowers today exercise greater caution, prioritizing platforms with a proven track record in Bitcoin custody and those that offer secure, transparent solutions — especially ones that do not engage in rehypothecation,” Rocca said, adding:
“At the same time, demand for Bitcoin-backed loans is on the rise, particularly among high-net-worth individuals and institutional investors who seek liquidity without selling their Bitcoin holdings.”
Beyond offering non-rehypothecated custody and MPC-level security, Xapo has also implemented robust risk management measures and tools to help prevent automatic liquidations.
“In the event of a Bitcoin price drop, customers receive instant notifications, allowing them to either top up their collateral or make partial repayments to maintain their loan status,” Rocca noted.
Xapo is not alone in exploring lending products in 2025.
Earlier in March, Bitcoin infrastructure firm Blockstream raised multibillion-dollar funding to launch three institutional funds, two of which are expected to offer BTC-based lending options.
Sources:
https://cointelegraph.com/news/xapo-bank-bitcoin-usd-loans-long-term-hodler
https://www.xapobank.com/en/faq/features/which-countries-is-the-cryptocurrency-feature-available
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