Crypto lending allows you to borrow cryptocurrencies in the same way you would take out loans with other forms of money. Popular cryptocurrencies, such as Bitcoin, Cardano, Ethereum and Litecoin, can be used to purchase properties, make business investments, and use assets as collateral to create liquidity.
Crypto lending platforms have quickly grown to be worth billions of dollars across various platforms. They offer quick access to new cash flows and high-value assets with terms of as little as a few weeks to a maximum of around two years.
However, gaining access to crypto finance loans that offer competitive packages and significant funds can be challenging. The niche nature of crypto finance means few lenders offer loans and they’re not always willing to negotiate with individuals.
A crypto-backed loan typically requires borrowers to have significant existing cryptocurrency investments. A minimum loan begins at around £100,000 but is more likely to go into the millions of pounds, and terms are likely to include a loan-to-value ratio of approximately 50%.
Crypto lending payments are made in a specific cryptocurrency and deposited on a regular basis. It comes in two primary forms of crypto lending platforms: centralised crypto lenders and decentralised crypto lenders. Both options provide access to significant interest rates, often up to 20% annual percentage yield (APY), and will likely require borrowers to make collateral deposits against their crypto loans.
Crypto lending enables investors to borrow funds against crypto assets they deposit and lend currency to earn interest through crypto rewards. But loan terms can differ drastically, with terms of as little as seven days, charging hourly interest rates, and offering indefinite lines of credit.
Crypto finance is available to anyone that holds significant cryptocurrency assets and convinces lenders they have solid plan for the borrowed money and exit strategy. However, the more cryptocurrency you wish to borrow, the more tentative lenders may be.
It’s crucial to understand that crypto lending can be risky for borrowers and lenders. All deposited funds are vulnerable to the volatile crypto market, which can see assets drop in value without warning. Crypto lending platforms are increasingly being targeted by regulators, but it continues to be a risky practice. Some of the most prominent risks of crypto lending include:
High interest rates: It is possible to discover crypto loans with attractive rates. However, most will charge above 5% annual percentage rate (APR), and many charge in advance of 13% APR.
Illiquid funds: The process of depositing assets into crypto lending platforms means the funds become illiquid, which means they’re tricky to convert into cash and are difficult to access quickly. As a result, some crypto lending platforms will operate long waiting periods for users to access their funds.
Margin calls: A margin call occurs when a user’s deposited collateral decreases in value. Borrowers will need to deposit more collateral to bring the LTV down, or they could see their assets liquidated.
Unregulated platforms: Crypto lending platforms aren’t regulated, so they don’t offer the same level of protection as banks. If a bank becomes insolvent, users’ funds are protected up to a certain amount. But with crypto lending platforms, users have no protections and could risk losing their funds.
Most crypto loans operate an instant approval process, and terms of the agreement are stored in secure smart contracts, which makes this form of borrowing extremely quick. To secure a crypto loan, you need to sign up for a centralised lending platform or connect your digital wallet to a lending platform. You can choose the collateral you want to deposit, the type of loan you require and the amount you wish to borrow. The transaction is completed by depositing the collateral into the lending platform’s digital wallet, which triggers the requested loan to transfer to your account or digital wallet.
Before securing crypto finance, it’s crucial to ensure the loan is affordable. Even if you have significant wealth already invested in cryptocurrencies, you shouldn’t consider lending unless you can easily manage the repayments. But our team of cryptocurrency experts can help you broker deals worth millions of pounds if you have access to significant cryptocurrency.
Crypto lending is still quite a niche market, but we’re increasingly seeing ultra-high-net-worth individuals establish significant amounts of capital by investing in it. However, managing crypto-backed finance can be tricky without knowing who the most relevant lenders are, where to find them and to negotiate with them.
Navigating the space yourself can become complex, especially without having established relationships with crypto finance lenders. Furthermore, many lenders in this space don’t promote their services publicly and only work on an introduction basis.
So our relationships with leading lenders help you negotiate the best crypto finance packages. Hectocorn begins by understanding why you need crypto finance, the amount of cryptocurrency you need to borrow, and any digital assets you can use as collateral. We can then advise on lenders that will be likely to accept your application and start maximising the amount of crypto finance you can borrow.
Hectocorn helps you negotiate significant crypto finance deals that work for your requirements and your specific background. Crypto lending can help you grow your real estate portfolio, expand your business, or launch new business investments. But securing the ideal financial package can be difficult, especially when borrowing vast sums of money.
The more cryptocurrency you wish to borrow, the more wary lenders will be. So your case presentation is vital to securing crypto finance. You need to be transparent and present the facts accurately from the off to avoid creating doubt in lenders’ minds. Hectocorn will help you develop your case and financial situation and deliver it in a way that appeals to specific lenders.
Hectocorn’s expertise helps you secure the best value crypto finance loans from leading lenders. That requires an understanding of how to approach lenders and the information they require. Our established relationships with crypto lending platforms help you maximise how much cryptocurrency you can borrow and broker high-value deals faster than other forms of lending.