Ledn has funded more than $11 billion in bitcoin-backed loans since it launched in 2018. The company expects that figure to reach $1 trillion in the coming years. That’s a bold projection. The reason Ledn gives for it is more telling than the number: more and more borrowers want the cash for things that have nothing to do with trading.
Ledn and SALT Lending, two of the longest-running lenders in this business, said loans secured by locked-up bitcoin are paying for tuition, getting people through slow months and covering business cash needs. With bitcoin trading at $83,122.00, a lot of people are holding value they’d rather borrow against than sell.
“What I am seeing, both in the conversations I’m having and in the data, is that more people are starting to borrow against their Bitcoin for real-world needs. That includes emergency expenses and larger life decisions, such as funding college tuition or a once-in-a-lifetime trip. We also see people using it to supplement their cash flow,” Hunter Albright, chief revenue officer of SALT Lending, said.
The borrowers have changed
SALT started offering bitcoin-backed loans in 2016. Its first customers were miners, the operations that verify blockchain transactions and earn BTC rewards for it. That was a narrow customer base with an obvious reason to want cash without dumping what they mined.
The mix looks different now. Albright said SALT has seen an influx of institutional borrowers, along with “Gen Xers and baby boomers who own bitcoin and want help understanding the loan process.” SALT didn’t disclose its total historical loan volume, so there’s no way to measure that shift from the outside.
Ledn describes a similar spread. “Our borrowers range from traditional investors seeking to get more from their bitcoin position, to entrepreneurs who want to access working capital, to institutional players,” Adam Reeds, co-founder and CEO of Ledn, said.
The gap between wealthy and retail clients is wide. Reeds said Ledn’s private wealth clients borrow large sums for “larger tickets such as investments, real estate, their businesses or their children’s education.” Retail borrowers take smaller amounts for near-term needs, like covering a month of expenses when their main income falls short.
That second group is the one to watch. Covering a month of bills with a loan secured by an asset that swings as much as bitcoin is a different bet from a wealthy client funding a real estate deal, and the lenders themselves bring up volatility as the problem they still need to solve.
The whole pitch is that you never sell
The main reason to borrow against BTC is to get cash out of a passive investment without selling it and losing your exposure. Albright said SALT’s core purpose hasn’t changed since it started.
“We don’t believe people should have to sell their most valuable assets to get the value out of it,” he said.
Ledn’s clients think the same way. “People borrow against their bitcoin because they believe it will be worth more in the future, and they also want to be certain they’ll get it back,” Reeds said.
That belief also explains why so few of these loans get closed out. “Most clients renew their loans, because the whole premise of this type of lending is not selling bitcoin and continuing to hold the position,” Reeds said.
Albright framed it as wealth tactics spreading downmarket. In his telling, strategies the ultra-wealthy and large corporations have used for centuries are finally opening up. “Now, that is becoming available to a broader group of people based on the asset they own and hold,” he said.
Fixed rates are the next fight
Variable costs are the weak spot in this kind of loan, and SALT knows it. The company wants crypto loans to behave more like traditional mortgages.
“Our ultimate goal is to have loan products behave much more like a mortgage, where someone can take out a loan, at a fixed rate over a longer term and have greater predictability around the cost of borrowing, even while Bitcoin remains volatile,” Albright said.
Coinbase has already moved in that direction. On Sept. 22, it added fixed-rate bitcoin-backed loans to its retail app through Morpho’s Midnight protocol. You borrow USDC against your bitcoin, and the interest rate and repayment date are set at the start. Those fixed-rate options sit next to Coinbase’s existing variable-rate loans on Morpho, which have more than $1.4 billion outstanding against roughly $3 billion in collateral.
But Coinbase’s fixed-rate loans are short-dated. SALT is aiming for much longer terms, and that’s where the mortgage comparison would start to hold up.
Ledn wants to lend against gold next
Reeds sees the same collateral model spreading beyond bitcoin. Gold, the traditional safe haven, is already used around the world to unlock cash through loans.
“The next stage is lending against hard assets more broadly,” Reeds said, pointing to precious metals as the logical next step.
“Gold is the obvious next example. It’s a twenty-trillion-dollar asset, yet borrowing against it has largely been an institutional privilege. For most everyday holders, the way to get cash from gold has been to sell it,” Reeds said.
For Ledn’s customers, the line between digital and physical assets is already getting blurry. “Our clients increasingly think in terms of hard assets they want to hold for the long term, and borrow against rather than sell,” Reeds said.
If you’re considering one of these loans to cover tuition or a slow month, look at the term before you look at the rate. A fixed rate only protects you until the loan comes due. Right now the fixed-rate product you can get is short-dated, and the longer-term version is still something SALT is aiming for.
