Want to borrow cash without selling your Bitcoin or Ethereum? A crypto-backed loan lets you post your digital assets as collateral and receive funds—often faster than a bank, and without triggering a taxable sale of your crypto. Below, we explain how crypto loans work, the risks and benefits, and how to choose a safe platform.  

For deeper dives, check out our pieces on what happens if you default on a crypto loan and how crypto loan repayment works in practice. If you care about compliance (and you definitely should), we invite you to review our regulation page.

What is a crypto loan?

A crypto loan is a secured loan where you deposit digital assets (BTC or ETH most commonly) as collateral to unlock cash or stablecoins (like USDC). You keep market exposure by continuing to own your assets while you borrow against them; if the price rises during the term, you still get the upside.  

Most crypto loans are overcollateralized to absorb volatility—you put up more crypto than the funds you borrow. Many providers aim for about 50% LTV (a 2:1 collateral-to-loan ratio).  

Example: post $20,000 in BTC to borrow $10,000. If the price falls and your LTV rises, eventually, if it reaches margin call level, you’ll be asked to add more collateral or repay some of your loan principle to restore the health of your loan. If you don’t take any action and the value of your BTC collateral continues to fall, some (or all) of your collateral may be sold to restore the LTV of your loan to its original level.  

These two thresholds are known as the margin call LTV and the liquidation LTV. At APX Lending, our soft-margin call LTV is set at 80% and our liquidation LTV is set at 90%. The difference between a soft-margin call and a regular margin-call is that with a soft-margin call you’re simply advised that your LTV is reaching a critical level, but no action will be taken until such time that it crosses liquidation LTV (90%). This gives you, the borrower, more flexibility and time to take action.

How do crypto loans work?

Collateral requirements

You transfer crypto to the lender’s custody wallet and get a loan for a period of time at an agreed upon interest rate. Because prices swing fast, platforms require a starting buffer (lower LTV) so routine volatility doesn’t trigger liquidation calls. This liquidation call concept is standard in crypto lending. That said, many providers notify borrowers of a potential liquidation call long before it happens.

Loan-to-value ratio (LTV)

LTV is the loan amount divided by the current value of your collateral. Example: post $20,000 in BTC and borrow $10,000 → 50% LTV. Lower LTV = more safety room before a margin or liquidation call; higher LTV = more risk of liquidation during volatility. (Many platforms trigger margin calls/liquidations as LTV approaches defined thresholds.)

Repayment and interest

Depending on the provider, you’ll see fixed terms or flexible repayment. Interest accrues like any secured loan. In general tax guidance, borrowing is typically not treated as a taxable disposition (unlike selling your crypto), but rules vary, and liquidation can have tax consequences—so speak with a professional. See CRA and IRS resources for how digital assets are treated for tax purposes.  

Types of crypto loans

• Collateralized (most common): You pledge crypto and borrow less than its value.

• Uncollateralized (e.g., DeFi “flash loans”): Advanced, instant loans repaid within the same transaction; not practical for everyday borrowers.  

• CeFi vs. DeFi:

• CeFi (centralized): A regulated company or trustee holds your collateral and manages risk; key risks are counterparty/custody and rehypothecation.

• DeFi (decentralized): Smart contracts run the loan; risks include code exploits, oracle failures, and automatic liquidations in stressed markets, as well as zero recourse if you make a mistake.  

Pros and cons of crypto loans

Pros

• Keep upside exposure—no need to sell your crypto.  

• Potentially faster access to funds than traditional lending.

• Flexible use of loan proceeds.

Cons

• Volatility risk: Price drops can trigger margin calls or liquidation.  

• Counterparty/custody risk (CeFi) or smart-contract risk (DeFi).  

• Fees and interest can add up; always read the fine print.

How to choose a crypto loan platform

Use this checklist before you borrow:

1. Registration and compliance: In Canada, confirm any Money Services Business (MSB) registration in FINTRAC’s public registry. In the U.S., check FinCEN’s MSB registrant search and state requirements.  

2. Local approvals: If a firm claims provincial/territorial relief or approval, look for the decision on the regulator’s site (e.g., Ontario Securities Commission). You can find ours right here.  

3. Risk policies: Clear LTV ranges, margin-call alerts, and liquidation process in plain language.

4. Custody and asset handling: Understand where collateral is custodied and whether assets are segregated (avoid commingling/rehypothecation at all costs if you want to decrease the risk of losing your collateral). Look for regulated or approved providers with segregated and insured cold storage custody that’s visible on-chain in real-time.

5. Transparency on fees and repayment: Origination fees (if any), early-repayment options, prepayment penalties (if any), and how quickly collateral is released once you repay.  

6. Support and speed: Response times and funding timelines matter when markets move. That’s why our support team consists of real humans.  

Why choose APX Lending for your crypto loan?

APX was the first crypto-backed lender to be granted exemptive relief by the Ontario Securities Commission in 2025. This approval allows us to offer crypto-collateralized lending services across Canada, coast to coast—underscoring our commitment to operating within the country’s regulatory framework. See the OSC’s public decision and our Regulation page for details.

We have three simple value propositions:  

The safest crypto-backed lender

APX holds the first-of-its-kind exemptive relief by the CSA. We’re also registered with FINTRAC (Canada) and FinCEN (U.S.), hold a SOC 2 attestation, and undergo annual penetration testing to protect our platform against hackers and other bad actors.

We hold our borrower’s collateral with BitGo Trust custody, the same place the FBI custodies their crypto, with insurance coverage up to US$250M. Most importantly, every borrower can view their collateral on the blockchain in real time, 24/7. Collateral is never re-hypothecated, pooled, or moved outside of the custodian. We also make sure that, legally, unless your loan goes into default, your crypto stays your property—at all times.

The easiest to work with

Open an account, clear KYC, and deposit collateral in a single self-serve flow—no email back-and-forth, no waiting games. Most borrowers clear identity verification in minutes, not days.  

E-sign everything. Update identity docs, extend terms, or swap collateral directly in-app. Need help? Our human support team is live on chat when you want it.  

Funding is fast: USDC is often near-instant; bank rails typically fund within 1 business day. Use a simple slider to set your LTV (20–60%) and term (3–60 months) while previewing your margin-call and liquidation-call prices and monthly interest in real time.

Think: the speed of DeFi, with the human touch of TradFi.

The most flexible

Choose terms and repayment options that fit your needs:

• LTV your way: anywhere from 20% to 60%

• Terms your way: from 3 to 60 months, with the ability to extend

• Repay your way: pay down early at any time.  

• Rates your way: flat in Canada (12.99% APR) or tiered in the U.S. (9.99–11.99% APR)

Whether you’re borrowing $10K for short-term cash-flow needs or securing an eight-figure line for treasury management, APX adapts to you—all on the same rails.

Frequently asked questions