Can you borrow against Crypto?

While borrowing against crypto is designed to be easy for users, there are several nuances throughout the process and consequences in place if you fail to pay this money back. Before we discuss the process in a bit more detail, let’s take a look at how you would borrow against crypto in the first place.

What is a crypto loan and how does it work?

When you take out a crypto loan, you are borrowing against your crypto to access part of its value in fiat currency. Once you lock your assets with a crypto exchange as collateral, money is provided and paid back over time along with interest. Of course, this is a slight oversimplification.

Why do I get margin calls on my crypto loan?

The crypto that is being borrowed against can fluctuate due to this volatility, causing undesired consequences, such as margin calls. At some point during the repayment period of a crypto loan, you might receive a margin call from your exchange.

What is a crypto exchange and how does it work?

The crypto exchange still takes on the most basic role of a bank by providing you with your requested loans. Rather than requiring background checks and lengthy approval processes, the exchange only cares whether you have the necessary assets to receive a loan.