Crypto-backed loans offer tax benefits and flexibility for holders in UK and US

Many cryptocurrency holders who invested in assets like Bitcoin years ago now find themselves facing unexpected cash needs. Instead of selling their crypto — an action that could limit future upside and create tax liabilities — some are turning to crypto-backed loans as an alternative to liquidating their holdings. Crypto-backed loans operate on a collateralized basis, much like a mortgage or car loan. Borrowers pledge digital assets such as Bitcoin or Ethereum as collateral and then receive either cash or stablecoins in return. Upon repaying the loan, borrowers reclaim their original assets. Two main factors make these loans different from their traditional counterparts. Lenders typically do not require credit checks, relying solely on collateral value, which opens access to those with limited or no credit history.

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