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How Do I Borrow Against Crypto in Canada?

The Canadian financial landscape is evolving rapidly and innovative solutions are continually emerging to meet the needs of consumers. One such solution gaining traction not just in Canada but also abroad is borrowing using cryptocurrency as collateral. This approach offers a unique avenue for individuals to leverage their digital assets without the traditional constraints associated with credit scores.

So, if you're wondering, "Can I borrow money using my Bitcoin or Ethereum in Canada?" the answer is a resounding: Yes!

This article will guide you through the exciting world of crypto-backed loans, highlighting its benefits, legal considerations, and how APX Lending can be your ideal partner in maximising the capabilities of your resources.

Crypto: A New Era of Borrowing

For decades, accessing loans in Canada hinged heavily on credit scores. A high score opened doors to favourable rates and terms, while lower scores often meant limited options, high-interest rates, or even loan denial. This left many individuals, even those with valuable assets but limited credit history, feeling excluded from the financial system. But it especially affected holders of cryptocurrencies, the value of which was simply not taken into account by the banks when assessing an individual’s net worth.

The landscape is shifting; the introduction of crypto-backed loans marks a revolutionary new approach that unlocks new possibilities for Canadians. Instead of relying on credit scores, these innovative loans leverage the value of digital assets, such as Bitcoin and Ethereum, as collateral. This opens doors for:

  • Investors seeking leverage: Crypto holders can access loans without selling their digital assets, allowing them to retain their long-term investment potential. More importantly, crypto investors can now unlock the liquidity in their crypto holdings without having to sell their crypto (and potentially pay capital gain taxes).
  • Businesses that hold crypto: Instead of selling the crypto on their balance sheets and paying taxes on the sale of the crypto, certain businesses can now borrow against their crypto, and even write off the interest payment of their loans as an expense.
  • Young Canadians: Individuals who haven't had the time to build extensive credit history can now access funding based on the value of their crypto holdings.
  • Credit-challenged individuals: Those with past financial hiccups or limited credit history need not worry about Credit Scores and get loans easily.

The benefits extend beyond mere access. Crypto-backed loans offer:

  • Greater financial flexibility: Borrow funds for unexpected expenses, investments, or other needs without impacting your credit score.
  • Competitive interest rates: Enjoy potentially lower interest rates compared to traditional loans, especially when using platforms such as APX Lending.
  • Faster approval times:  Experience streamlined application processes with quick approval times, as no credit checks are required!

Understanding Crypto-Backed Loans: The Basics

Crypto-backed loans offer a solution by unlocking the potential of your crypto without forcing you to sell it. Unlike traditional loans that rely heavily on credit scores, crypto-backed loans operate like secured loans. Your cryptocurrency acts as collateral, similar to how a house secures a mortgage. 

This means you temporarily deposit your crypto with a lender (like APX Lending) as a guarantee. APX Lending then holds your cryptocurrency collateral with an insured custodian, where it is visible to you on the blockchain for the duration of the loan. Furthermore, the collateral is held with a custodian in your name as the borrower, meaning if anything should happen to APX Lending as a company, your collateral is completely separated from APX Lending, a first in the world.

The loan amount is usually based on a percentage of your deposited crypto's value (known as the Loan-to-Value ratio).

And, like any loan, you will agree to repay the borrowed amount plus interest over a defined term. Once you make all your interest payments and repay your loan, you regain full ownership of your deposited crypto.

It's like getting your security deposit back when you move out of an apartment!

Key Benefits:

  • No Credit Check: This is the game-changer! Crypto-backed loans bypass traditional credit checks, opening doors for those with limited credit history or past financial challenges.
  • Accessibility for All: Whether you're a young investor starting out or someone building financial resilience, crypto-backed loans offer an alternative to traditional credit options.
  • Flexibility and Opportunity: Use the loan for various purposes, from consolidating debt to covering unexpected expenses, all while holding onto your crypto's potential for future growth.
  • Safety and Security: Your crypto collateral is held in a segregated and insured wallet in your name, meaning your crypto is protected should anything happen to APX Lending.

Regulatory Frameworks

All Canadian provinces have established comprehensive statutory frameworks to govern security interests or hypothecs in both personal and real property. In provinces following common law principles like Ontario, key legislation includes the Personal Property Security Acts (PPSAs) and the Securities Transfer Acts (STAs). Conversely, in Quebec, secured transactions are governed by the Civil Code of Quebec (CCQ), which contains provisions specifically addressing hypothecs, supported by procedural rules in the Code of Civil Procedure (CCP). 

While these regulations do not explicitly address cryptocurrency or crypto-assets, lenders must adhere to them to ensure the validity and enforceability of their security interests. Consequently, lenders need to take into account tax regulations, transfer limits, and currency regulations applicable to both cryptocurrency and other crypto-assets, as these factors may influence the loan structure, proceeds transfer, and repayment of principal and interest.

Instant Crypto Loan: How to Access Funds Quickly?

If you're looking for a fast, secure, and credit-score-agnostic way to leverage your Bitcoin, APX Lending is your ideal partner. We offer competitive rates, transparent terms, exceptional customer support, and an unwavering focus on the safety and security of your collateral. With us, you can access the funds you need without compromising your financial future.

Visit our website today to learn more about our Bitcoin or Ethereum-backed loans. Contact us directly if you have any questions or need personalized assistance. Borrow against Bitcoin or Ethereum with APX Lending today!

1. Can I take a loan out on my Bitcoin or Ethereum?

Yes, you can! In Canada, you can access crypto-backed loans that use your Bitcoin or Ethereum as collateral. This means you don't have to sell your Bitcoin, but you deposit it with a lender as a guarantee while you repay the loan. APX Lending can help you with that.

2. How do I get a crypto loan without a credit check?

Unlike traditional loans that rely heavily on credit scores, crypto-backed loans do not require credit checks. This makes them an attractive option for individuals with limited credit history, past financial challenges, or even young Canadians just starting out.

However, it's crucial to:

  • Choose a reputable lender: Ensure the platform is registered with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), and adheres to KYC/AML (Know Your Customer/Anti-Money Laundering) regulations, and clearly explains its terms and conditions.
  • Understand the risks: Crypto-backed loans involve a number of risks, including the risk of losing your collateral if the value of your collateral drops drastically. Choose a loan amount you can comfortably repay even if crypto prices dip.
  • Borrower responsibly: Don't overextend yourself and only borrow what you need. Consider alternative options if you have poor financial management habits.
  • Monitor the LTV of your loan: If the value of your collateral drops, you may have to send more collateral or pay back some of your loan to keep your loan out of liquidation. Alternatively, if the value of your collateral rises, you may qualify for more loans!

Secondly, interest rates on crypto-backed loans can vary depending on the platform, loan amount, and chosen crypto. Always compare rates and terms before deciding.

Remember, crypto-backed loans are a financial tool, not a magic bullet. Use them wisely and responsibly to leverage your Bitcoin's potential without jeopardizing your financial well-being.

APX Lending does not offer financial or tax advice. We strongly encourage you to consult with a certified financial or tax professional for guidance on any related inquiries you may have.