Bitcoin-backed lending is evolving into a mainstream source of credit, with borrowers increasingly using BTC as collateral to access liquidity without selling their holdings. According to lenders in the space, borrowers are funding real-world needs including tuition fees, emergency expenses, business working capital, and major purchases.
SALT Lending, which began offering bitcoin-backed loans in 2016, has seen a significant shift in its customer base. The lender initially served bitcoin miners but now attracts institutional borrowers alongside individual investors from older generations seeking to understand the loan process. "What I am seeing, both in the conversations I'm having and in the data, is that more people are starting to borrow against their Bitcoin for real-world needs," Hunter Albright, chief revenue officer of SALT Lending, told CoinDesk.
Centralized lender Ledn, which launched in 2018, has funded more than $11 billion in loans to date and expects that figure to grow to $1 trillion in the coming years. The company's borrowers include traditional investors, entrepreneurs seeking working capital, and institutional players.
Preserving Bitcoin Holdings
The primary motivation for borrowing against bitcoin is to unlock liquidity from the asset without having to sell and lose exposure to potential future gains. Ledn's co-founder and CEO Adam Reeds explained that clients borrow for various purposes: private wealth clients access larger amounts for investments, real estate, business ventures, and education expenses, while retail clients pull smaller amounts to cover near-term needs when income falls short.
Most of Ledn's clients renew their loans rather than repaying them outright, reflecting the core philosophy behind crypto-backed lending: "People borrow against their bitcoin because they believe it will be worth more in the future, and they also want to be certain they'll get it back," Reeds said.
Moving Toward Fixed-Rate Products
Lenders are working to make crypto-backed loans more predictable and resemble traditional financial products. SALT aims to develop loan products with fixed interest rates and longer terms, similar to mortgages. On September 22, Coinbase added fixed-rate bitcoin-backed loans to its retail app through Morpho's Midnight protocol, allowing users to borrow USDC against bitcoin with predetermined interest rates and repayment dates. Coinbase's variable-rate loans on Morpho boast more than $1.4 billion outstanding against roughly $3 billion in collateral.
Expansion Beyond Bitcoin
Looking forward, lenders see the collateralization model expanding to other hard assets. Ledn is exploring lending against gold, noting that while gold is a twenty-trillion-dollar asset used globally to unlock liquidity through loans, borrowing against it has largely remained an institutional privilege. For most individual holders, accessing cash from gold has required selling the asset.
"The next stage is lending against hard assets more broadly," Reeds said, describing the evolution as a blurring of the line between digital and physical alternative assets for modern investors.
