Xapo Bank offers Bitcoin-backed loans, providing liquidity options without selling Bitcoin, enhancing crypto management – IcoHolder.

In an innovative move to enhance liquidity options for its customers, Gibraltar-based Xapo Bank has launched a new lending product that offers U.S. dollar loans backed by Bitcoin (BTC). The initiative, aimed at curbing the tendency for Bitcoin holders to sell during market uncertainty, allows users to borrow up to $1 million, using their Bitcoin as collateral.

Xapo Bank's Bitcoin-backed loans give eligible customers access to as much as 40% of their Bitcoin’s value in U.S. dollars, with repayment terms of up to one year, depending on the loan size. The product is designed to offer flexibility and liquidity without the need to liquidate crypto holdings during times of market volatility.

The bank, which is well-known for its focus on Bitcoin custody, aims to mitigate the sell pressure that often accompanies market downturns. Xapo's new offering intends to encourage long-term holding of Bitcoin by providing a safety net of liquidity when required, making it easier for customers to retain their BTC while still having access to cash.

This move comes at a time when the broader crypto lending space is still recovering from high-profile failures, such as BlockFi and Celsius in 2022. Both companies had promised similar products but eventually collapsed, shaking investor confidence. However, unlike these collapsed entities, Xapo operates as a fully licensed bank, which could offer a level of stability and trust that is lacking in some other crypto lending platforms.

In addition to the Bitcoin-backed loans, Xapo Bank continues to expand its crypto offerings. In August 2024, it collaborated with Hilbert Group to launch a $200 million Bitcoin fund. Furthermore, Xapo's crypto suite grew in 2023 with the inclusion of tokens like Ethereum and Cardano, providing customers with a broader range of investment options.

As the crypto industry evolves, Xapo Bank's new product could play a key role in reshaping how digital asset holders manage liquidity, offering a safer alternative to liquidating their holdings during challenging market conditions.