Bitcoin-backed loans are increasingly being used for everyday financial needs rather than simply for trading, according to two established crypto lenders.
Borrowers are pledging BTC as collateral to access cash while keeping their bitcoin exposure. The use cases now include college tuition, emergency expenses, business working capital and temporary cash-flow gaps, signaling that bitcoin-backed finance is beginning to resemble traditional credit.
Hunter Albright, chief revenue officer at SALT Lending, told CoinDesk that both customer conversations and lending data show growing demand for borrowing against bitcoin to cover real-world expenses.
He said customers are using loans for emergencies and major personal decisions, including college tuition and expensive once-in-a-lifetime trips. Others are borrowing to supplement their regular cash flow.
The shift represents a broader change in how bitcoin is being treated as a financial asset. Instead of relying solely on price appreciation or trading, holders can use BTC as collateral to obtain credit without selling their holdings.
SALT entered the bitcoin-backed lending market in 2016, initially serving bitcoin miners that earned BTC for verifying blockchain transactions. Its customer base has since expanded to include institutional borrowers as well as Gen X and baby boomer investors who own bitcoin but want assistance navigating the lending process.
SALT has not disclosed its total loan volume. The wider centralized crypto lending industry, however, has reached substantial scale.
Ledn, which began operations in 2018, has originated more than $11 billion in loans. The lender expects that figure could reach $1 trillion in the coming years as demand grows for loans unrelated to cryptocurrency trading.
Ledn co-founder and CEO Adam Reeds said its customers include traditional investors, entrepreneurs seeking working capital and institutional borrowers.
Private wealth customers tend to borrow larger sums for investments, real estate, businesses and their children’s education, Reeds told CoinDesk. Retail customers generally take smaller loans to cover immediate expenses, such as a month when their normal income does not fully cover costs.
Borrowing Without Selling Bitcoin
Avoiding a sale remains one of the biggest reasons investors borrow against BTC. By using bitcoin as collateral, borrowers can access liquidity while maintaining their position in the asset.
“We don’t believe people should have to sell their most valuable assets to get the value out of it,” Albright said, describing the principle behind SALT’s lending model.
Ledn customers take a similar approach. Reeds said borrowers generally expect bitcoin to appreciate over time and want to maintain ownership of their holdings.
That outlook can also lead customers to renew their loans rather than sell their BTC.
“Most clients renew their loans, because the whole premise of this type of lending is not selling bitcoin and continuing to hold the position,” Reeds said.
Albright said this type of financing is effectively making strategies historically available to wealthy individuals and large corporations more accessible to ordinary asset holders.
Fixed-Rate Loans Gain Attention
As bitcoin-backed lending moves closer to mainstream finance, lenders are also seeking to make borrowing costs easier to predict.
SALT wants to eventually offer products that function more like traditional mortgages, with fixed rates and longer repayment periods.
“Our ultimate goal is to have loan products behave much more like a mortgage, where someone can take out a loan, at a fixed rate over a longer term and have greater predictability around the cost of borrowing, even while Bitcoin remains volatile,” Albright said.
Coinbase has already moved into the fixed-rate market. On Sept. 22, it introduced fixed-rate bitcoin-backed loans through Morpho’s Midnight protocol in its retail application.
Customers can borrow USDC against bitcoin with the interest rate and repayment date determined when the loan is originated. The products operate alongside Coinbase’s variable-rate Morpho loans, which have more than $1.4 billion outstanding and roughly $3 billion in collateral.
Coinbase’s fixed-rate loans currently have short maturities, whereas SALT is looking to offer longer-term borrowing.
Gold Could Follow Bitcoin
The model may eventually extend beyond cryptocurrencies. Ledn sees lending against other hard assets, including gold, as a potential next step.
“The next stage is lending against hard assets more broadly,” Reeds said, describing precious metals as a logical expansion.
Gold, in particular, could be an important market. Reeds estimated the asset is worth $20 trillion but said borrowing against it has traditionally been largely limited to institutional participants. For ordinary holders, selling gold has generally been the easiest way to turn it into cash.
That could change as lenders apply similar collateral-based models to both digital and physical assets.
“Our clients increasingly think in terms of hard assets they want to hold for the long term, and borrow against rather than sell,” Reeds said.
