Xapo Bank has introduced Bitcoin-backed loans, allowing clients to use their Bitcoin as collateral to access USD funds without needing to sell their assets.

While Xapo initially expected average loan requests of $50,000, there has been a notable demand for larger loans, with high-net-worth clients seeking amounts up to $1 million.

To mitigate risks, Xapo Bank implements conservative loan-to-value ratios of 20% to 40%, protecting customers from liquidation unless Bitcoin prices fall significantly.

The launch, announced on March 18, 2025, aims to cater to clients who prefer to retain their Bitcoin while obtaining cash.

Borrowers can select flexible repayment terms ranging from 30 days to one year, with no penalties for early repayment, making it attractive for long-term Bitcoin holders.

The interest rate for these loans is approximately 10%, and members have full visibility of the final repayment amounts and applicable interest rates.

Xapo also provides proactive protection measures to prevent automatic liquidations, including notifications for clients if Bitcoin prices drop.

As a fully licensed bank, Xapo differentiates itself by offering a regulated environment for responsible lending, contrasting with the practices of previous centralized lenders.

This new loan product comes in the wake of a significant crisis in the crypto lending industry in 2022, which saw the collapse of major providers like Celsius and BlockFi.

CEO Seamus Rocca emphasized the bank's commitment to avoiding predatory lending practices, allowing members to access the value of their Bitcoin while adhering to their long-term investment strategies.

The loan offering is available to pre-approved clients globally, specifically in Europe and Asia, but excludes residents from the United States, the UK, and Australia.

Members can repay loans early without penalties and receive continuous updates on their loan status through a health checker feature, enhancing transparency and control.