Xapo Bank Launches Bitcoin-Backed Loans, Revitalizing Crypto Lending

Xapo Bank, a global cryptocurrency-friendly bank based in Gibraltar, is investing in the revival of crypto lending by launching Bitcoin-backed USD loans.

Qualified Xapo Bank clients can now access Bitcoin loans of up to $1 million, the bank announced on March 18.

The new loan product is designed for long-term Bitcoin hodlers who wish to access cash while holding onto their BTC, as Xapo Bank CEO Seamus Rocca explained:

“Unlike traditional assets, Bitcoin is an ideal form of collateral — it is borderless, highly liquid, available 24/7, and easily divisible, making it uniquely suited for lending.”

A key distinction of Xapo’s Bitcoin loan product is that the bank does not rehypothecate the loan collateral, meaning its lending mechanism does not involve the re-use of BTC assets by clients.

Instead, the Bitcoin collateral is stored in Xapo’s BTC vault using institutional multiparty computation (MPC) custody.

Eligible Xapo clients can choose repayment schedules of 30, 90, 180, or 365 days, with no penalties for early repayment, the bank announced.

Xapo Returns to the Crypto Lending Space with Bitcoin-Backed Loans

Xapo’s new Bitcoin lending offering will be available to pre-approved members based on specific criteria. The key eligibility criteria are the amount of Bitcoin holdings and the length of time held, with Xapo specifically targeting long-term Bitcoin holders with a long-term investment strategy. The bank stated that the offering will be available to global investors in regions like Europe and Asia, excluding residents of the United States.

Xapo Bank is regulated by the Gibraltar Financial Services Commission under the Financial Services Act of 2019 and successfully obtained a banking license in the United Kingdom in 2024.

Xapo’s loans are available across the European Union, but crypto lending is exempt from local regulations. The launch of Xapo’s new BTC loan product comes after the 2022 crypto lending crisis. CEO Seamus Rocca said, “The collapse of platforms like Celsius and BlockFi shook trust in the sector. Today, borrowers are looking for secure and transparent solutions.”

Xapo eliminates rehypothecation, offering risk management tools and proactive protection. Customers receive instant notifications if Bitcoin’s price drops, allowing them to either top up their collateral or make partial repayments.

Xapo is not the only firm working to introduce lending products in 2025. Blockstream is also planning to launch new institutional funds offering BTC lending.

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