The new product is a lending product that Xapo Bank Members who qualify can access USD loans by using bitcoins as collateral. The fiat value can be accessed by bitcoin owners without the need to sell.
Xapo BankThis week, the licensed bitcoin bank launched bitcoin-backed loans. Members who meet the criteria can take out loans of up to $1,000,000.
The loan money is instantly transferred to the bank account of the member once it has been approved. Xapo holds the Bitcoins until payment. This allows users to borrow against the current value of their bitcoin while still retaining their bitcoin for the long term.
Flexible repayment options are available for members, from 30 days to one year. Early repayment penalties or fees are not charged, allowing borrowers to minimize costs.
As per Xapo Bank Seamus Rocca, CEO at Crypto Lending Solutions Inc. says that the product is aimed to provide responsible solutions for bitcoin and cryptocurrency lending. Bitcoin holders were hit by high-risk platforms that lost their assets.
Xapo claims that its bitcoin-backed lending products have loan-to value ratios between 20% and 40%, which are conservative to protect the assets of members. Automation of loan and repayment monitoring, as well as automated controls to monitor the health of loans further reduces risks in comparison with other crypto lending products.
Bitcoin holders are increasingly looking for ways to gain access to the value of their bitcoins without selling assets. The future value of bitcoin can be lost if you sell it to meet short-term financial needs.
Experts urge caution, however, when using bitcoins as collateral, since a price drop could lead to the sale of assets if the loans are under-collateralized. Due diligence is recommended on the lender’s practices and associated risks.
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Source: bitcoinmagazine.com
