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Bitcoin-backed loans are gaining wider use as investors borrow against their cryptocurrency holdings to cover tuition, household bills, and business expenses. Lenders SALT and Ledn report growing demand from individuals and institutions seeking cash without selling their Bitcoin. Meanwhile, lenders are developing longer repayment terms and more predictable interest rates to support everyday borrowing needs.
The shift comes as Bitcoin lending moves beyond its early focus on miners and active traders. Borrowers now include entrepreneurs, wealthy investors, and households managing short-term financial needs.
SALT Lending, which began offering Bitcoin-backed loans in 2016, initially served cryptocurrency miners. Its customer base has since expanded to include institutional clients and older investors.
Hunter Albright, SALT's chief revenue officer, told CoinDesk that more borrowers now use Bitcoin holdings to finance personal expenses. These include college tuition, emergency costs, vacations, and temporary income gaps.
The lender has also seen growing interest from Generation X and baby boomers. Many hold Bitcoin but need guidance on how collateralized loans operate.
Similarly, Ledn reports demand from retail investors, entrepreneurs, and institutions. The company, founded in 2018, has issued more than USD 11 billion in loans since its launch.
Ledn CEO Adam Reeds said wealthier customers typically seek financing for real estate, investments, businesses, and education. Retail borrowers often request smaller loans to manage monthly expenses.
Meanwhile, entrepreneurs use Bitcoin-backed credit to obtain working capital while keeping their cryptocurrency holdings. This allows them to access funds without immediately selling their assets.
Ledn expects its cumulative lending volume to reach USD 1 trillion in the coming years as borrowing demand grows. The company has not provided a specific timeline for achieving that target.
For now, both lenders identify asset ownership as a key reason customers seek Bitcoin-backed loans.
Borrowers pledge their cryptocurrency as collateral and receive funds without selling their holdings. Consequently, they can retain exposure to future Bitcoin price movements while accessing liquidity.
Reeds said many Ledn customers renew existing loans since they prefer to maintain their Bitcoin positions. This approach allows borrowers to continue holding the cryptocurrency beyond an initial repayment period.
However, Bitcoin's price volatility presents challenges for lenders developing predictable borrowing terms. The value of pledged collateral can change sharply during a loan's lifetime.
SALT is working toward longer-term products with fixed interest rates. Albright said the lender wants borrowing arrangements to resemble mortgages, giving customers clearer repayment expectations.
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Coinbase has also entered the fixed-rate lending market. On September 22, the exchange introduced Bitcoin-backed loans through Morpho's Midnight protocol.
Customers can borrow USDC against Bitcoin with interest rates and repayment dates agreed upon when loans begin. The service operates alongside Coinbase's existing variable-rate lending products.
Those variable-rate products have more than USD 1.4 billion in outstanding loans backed by approximately USD 3 billion in collateral. However, Coinbase's new fixed-rate offerings currently have shorter repayment periods than SALT's proposed products.
Beyond Bitcoin, Ledn is exploring lending against other assets, particularly gold. Reeds identified precious metals as a potential next step for collateral-based borrowing.
He described gold as a USD 20 trillion market where institutional investors have traditionally enjoyed greater access to secured financing.
According to Reeds, Ledn customers increasingly prefer holding valuable assets over selling them. The lender sees potential demand for loans that allow gold owners to access cash while retaining ownership.
Bitcoin-backed lending is expanding as borrowers use cryptocurrency holdings to finance household expenses, education, and businesses. SALT and Ledn report demand beyond traditional crypto investors, while Coinbase has introduced fixed-rate options. Future developments include longer repayment periods and potential lending services backed by gold.
