Xapo Bank opens $1m Bitcoin-backed credit line

Crypto-Wealth Manager Xapo Banks offers loans in US dollars supported by Bitcoin to extend liquidity options for customers.

The Xapo Bank, based in Gibraltar, introduced a bitcoin (BTC) USD loans to discourage the sale of BTC and provide flexible liquidity routes for its eligible customers.

Xapo Bank users can access a million dollars in credit by offering their Bitcoin as a guarantee. Customers will have up to a year to reimburse the loan, depending on the size of the loan, and will be able to receive up to 40% of the value of their BTC in US dollars.

According to the company, which mainly focuses on BTC custody, customers often liquidate cryptographic titles first during market uncertainty. This model is added to the existing sales pressure and ultimately hinders the largest cryptocurrency by market capitalization.

The offer of loans in US dollars supported by BTC aims to encourage long -term detention of the BTC while providing rapid liquidity if necessary.

Lessons for past failures

In 2022, cryptocurrency lenders like Blockfi and Celsius promised similar products. However, the two companies were not delivered and were later noted having falsified the financial files to stay afloat. Their collapse contributed to an extended bear market, trembling confidence in cryptographic lenders.

However, while businesses like Blockfi and Celsius were regulated entities, Xapo operates as a bank entirely approved with a structure similar to traditional institutions. As such, the striking difference can produce different results in the case of Xapo.

In other news, Xapo Bank has teamed up with Commercial Company Hilbert Group in August 2024 launch A Bitcoin fund of $ 200 million. In 2023, Xapo Bank also extended Its crypto suite, allowing customers to buy tokens like Ethereum (Ethn) and cardadon (ADA).