We recently assisted a client in securing a loan secured by cryptocurrency holdings. The client held an asset portfolio valued at approximately £700,000. The client sought to leverage their digital asset holdings for liquidity, and the objective was to secure a loan of around £300,000.
To support the client, Enness sourced a reputable lender to offer competitive loan terms. The structure of the loan was designed to align with both the client’s needs and the security protocols of the lender.
- Loan Amount: Circa £300,000
- Asset Backing: 7 BTC (Circa £700,000)
- Interest Rate: The interest rate was set at approx. 6% (denominated in non-GBP). This denomination reflects international lending practices in the crypto space, offering a stable reference for the loan.
- Margin Call Threshold: A margin call set was high. If the value of the client’s Bitcoin holdings fell, the loan’s collateral could be affected. Should the value decrease beyond this threshold, the lender would require additional collateral or partial repayment to restore the required LTV.
- Custody Fee: The custody of the Bitcoin was managed by the lender. This fee covers the secure storage of the client’s digital assets while they act as collateral for the loan.
This loan structure reflected a balanced approach to cryptocurrency-backed lending, with a competitive interest rate and a reasonable LTV. The challenge for the client was to navigate the volatility inherent in cryptocurrency markets, which can fluctuate significantly. However, the loan’s terms provided flexibility, with margin call provisions in place to protect the lender while allowing the client to utilise their assets without selling them.
This case exemplifies the growing trend of using cryptocurrency as collateral for traditional financing. Enness’s expertise in crypto-backed lending allowed the client to access liquidity while maintaining their digital asset holdings. The terms we secured represented a secure and well-structured solution, balancing both the client’s financial objectives and the lender’s need for risk mitigation. Contact us today to see if we can achieve similar for you.
Disclaimer: This case study does not constitute financial advice and Enness do not give advice or recommendations on securities or crypto backing financing. We recommend seeking the advice of a wealth manager or professional adviser before investing in digital currencies.
Enness does not give advice on Securities Backed Lending or investments (or Luxury Asset Financing), and lender introductions are unregulated. This case study is for information and illustrative purposes only and nothing contain within should be construed as advice or a recommendation and is not an invitation to buy or sell securities.
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