With energy prices rising, switch to a cheaper plan
Compare Prices Now

Cryptocurrency lending

How to use your cryptocurrency as collateral for a crypto loan or earn money by lending cryptocurrency to borrowers.

Crypto.com App

Crypto.com App logo
  • Buy crypto at true cost with the lowest fees
  • Buy, sell, and manage 100+ cryptoassets, and track 250+ coins
  • Earn yield on your crypto holdings
Go to site

We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!

Cryptocurrency loans let you unlock the value in your crypto assets in a couple of different ways.

If you need to borrow funds, you can use your crypto as collateral when you apply for a loan. Alternatively, if you want to earn yield on your crypto, you can lend it to borrowers through a crypto lending platform and receive yield payments in return.

But how does cryptocurrency lending work, how much can you borrow or earn and what are the risks involved? Keep reading to find out.

Compare cryptocurrency lending services

Disclaimer: This should not be taken as an endorsement of any of these platforms. You should do additional research to make sure you choose a reliable platform that suits your needs. Note that the availability of these platforms may vary by location. Some platforms may not be licensed or regulated in your jurisdiction.

1 - 5 of 6
Name Product Passive income
Binance Cryptocurrency Exchange
Earn returns on cryptocurrency deposits
Join EOS, XTZ, KAVA and other staking pools
Returns up to 8% or more depending on the cryptocurrency
Earn up to USD100 in rewards by completing welcome offer tasks within 7 days of sign up. T&Cs apply.
Binance is the world’s largest exchange by trading volume. Get started with instant zero fee AUD deposits and withdrawals in Australia, and enjoy low trading fees, a wide selection of cryptocurrencies and 24/7 local customer support.
KuCoin Cryptocurrency Exchange
Finder exclusive: Sign up and use code 1xf56 for one month of VIP 1 benefits. Deposit/transfer more than 0.1 BTC to KuCoin within 7 days of registration for 1 month of VIP 2 benefits. T&Cs apply.
Browse a variety of coin offerings in one of the largest multi-cryptocurrency exchanges and pay in cryptocurrency.
Crypto.com App
Finder Award
Crypto.com App
Earn returns on cryptocurrency deposits
Returns up to 12% or more depending on the cryptocurrency
Buy 250+ cryptocurrencies, earn up to 14.5% p.a. on holdings, pay with your crypto for cashback at stores, get loans and more with this complete crypto-finance platform.
Earn up to 5% APY on crypto
Earn up to 8.6% APY on stablecoins
Actual rates vary depending on the coin and amount
Crypto’s supported include BTC, ETH, LINK, LTC, PAXG and stablecoins
Deposit your cryptocurrency with Block.fi to earn yield, or take out a cash loan without having to give up your investment
Bitfinex Professional Trading Exchange
Earn interest from P2P margin funding
Rates determined by market conditions
Cryptocurrencies are a highly volatile investment product. Your capital is at risk.
Spot trade all of the major cryptos on this full-featured exchange and margin trading platform.
Disclaimer: Star ratings are only displayed for products with 10 or more reviews.

Compare up to 4 providers

1 - 4 of 4
Name Product Loans
Binance Cryptocurrency Exchange
50% LTV ratio
Borrow US$100 minimum
~10% APY
Earn up to USD100 in rewards by completing welcome offer tasks within 7 days of sign up. T&Cs apply.
Binance is the world’s largest exchange by trading volume. Get started with instant zero fee AUD deposits and withdrawals in Australia, and enjoy low trading fees, a wide selection of cryptocurrencies and 24/7 local customer support.
Crypto.com App
Finder Award
Crypto.com App
50% LTV ratio
Borrow US$250 minimum
8-12% APY
Buy 250+ cryptocurrencies, earn up to 14.5% p.a. on holdings, pay with your crypto for cashback at stores, get loans and more with this complete crypto-finance platform.
50% LTV ratio
Borrow USD or stablecoins against your BTC, ETH, LTC and PAXG deposits
APY start from 4.5%
Deposit your cryptocurrency with Block.fi to earn yield, or take out a cash loan without having to give up your investment
Nexo Cryptocurrency Lending
50% LTV ratio
Low/no minimums for crypto and fiat loans
APY from 5.9%
Borrow and lend fiat, stablecoins or cryptocurrency, with 24/7 customer service and the option of using NEXO tokens for more competitive offers.
Disclaimer: Star ratings are only displayed for products with 10 or more reviews.

Compare up to 4 providers

What is cryptocurrency lending?

A cryptocurrency loan is a type of secured loan. But unlike a secured personal loan where you use an asset such as your car or home equity as collateral, with a crypto loan you use cryptocurrency as collateral.

In return, you can borrow stablecoins such as USDT or USDC, other cryptocurrencies like BTC or ETH or fiat currency such as US or Australian dollars. You then have to repay the amount you borrow plus interest, but if you can't afford the repayments you'll lose your collateral.

How cryptocurrency lending works

A cryptocurrency loan works in the same way as any other type of loan. You borrow funds for an agreed period and at an agreed interest rate, then pay back the principal and interest within the loan period.

Different platforms work in different ways, but the general principle is that of peer-to-peer lending. Borrowers use their cryptocurrency as collateral to get loans while lenders deposit cryptocurrency, which is used to fund the loans.

Let's break down some of the key features of crypto loans.


Loan interest rates vary depending on your circumstances, but it's possible to access lower interest rates from cryptocurrency lending services than on a traditional personal loan.

Cryptocurrency lending services differ from traditional lenders in how they assess your ability to repay a loan. Traditional lenders examine a borrower's credit score, credit history, income and outstanding debts before approving a loan.

On the other hand, crypto lenders vary their rates depending on how much collateral you put up and the loan term you select. The more collateral you have and the shorter the loan period, the lower your rate will generally be.

Some crypto lending platforms also offer rate discounts if you stake or use the platform's native token.

Loan amounts and LTV

Many crypto lending services only specify a minimum loan amount. This is as small as $50 or $100 with some lenders, but can be $10,000 or more with other providers.

However, the amount you can borrow is limited by the lender's maximum loan-to-value (LTV) ratio. The LTV is the value of the amount you're borrowing compared to the value of the collateral you provide to secure the loan. You can calculate the LTV ratio by dividing the loan amount by the value of your crypto asset, then multiplying the result by 100.

For example, let's say you want to borrow $1,000 and you put up $2,500 worth of Bitcoin as collateral. So the LTV is 1,000/2,500 then multiplied by 100, which gives you an LTV of 40%.

Most cryptocurrency lending platforms offer a maximum LTV of 50%, but there are exceptions. If you want to borrow $5,000, you'll typically need to put up at least $10,000 of collateral.

Finally, if you're willing to offer more collateral to get a lower LTV, you can often access a better interest rate.

Types of collateral

The next factor you need to consider when comparing cryptocurrency lending services is the type of crypto you can use as collateral. Some lenders accept Bitcoin only while others accept major cryptocurrencies such as Ethereum and Litecoin.

Some larger platforms accept dozens of crypto as collateral. For example, Celsius supports over 45 coins and tokens.

However, take note that you'll usually only be able to pay back your loan with 1 type of crypto asset.

Eligibility requirements

The application process for a crypto loan is a little different to applying with a traditional lender. Rather than assessing your credit score and income, the main concern of crypto lenders is ensuring that you can provide enough collateral to meet their maximum LTV.

Depending on the lending platform you choose, you may also need to provide photo ID and proof of address when you apply for a loan.

Centralised vs DeFi loans

Another factor you'll need to consider is whether you access a centralised or decentralised loan.

Centralised lending platforms screen borrowers and issue the loans themselves, then simply share the profits with the lenders. This creates an experience similar to the way banks offer loans and pay interest to savings account holders.

Decentralised finance (DeFi) lending platforms act as marketplaces where borrowers and lenders can come together and browse one another's offers. They rely on DeFi protocols and smart contracts to govern the borrowing and repayment process.

How to use the funds

You can use the funds you borrow for any personal expense. For example, you might use a crypto loan to:

  • Trade cryptocurrency
  • Pay down high-interest debt
  • Buy a car
  • Pay for a wedding

There are also some crypto lending services that specialise in loans for businesses.

What happens if the value of my crypto drops?

Cryptocurrencies are highly volatile, with prices rising or falling dramatically in a short time. Take Bitcoin, for example, which was trading above $90,000 in November 2021. By January 2022 it had dropped below $50,000.

It's this volatility that makes crypto loans a risky prospect for borrowers. If the value of your crypto collateral falls below the LTV on your loan, this could trigger a margin call.

When this occurs, you'll need to either offer more crypto as collateral or pay down your loan. You'll typically only have a deadline of hours or days to do so. If you don't, the lender will liquidate your collateral.

LTV and margin call requirements vary depending on the lending platform you choose. But as a general guide, a margin call is usually triggered when the LTV increases to 65–70%, with liquidation occurring when the LTV reaches 80% or 85%. Check the fine print that applies to your crypto loan to find out all LTV terms and conditions.

If the value of your collateral increases and your LTV drops below a certain point, some lenders such as Celsius offer what's known as a reverse margin call. This results in a portion of your collateral being returned to you.

Benefits of cryptocurrency lending

Why consider a crypto-backed loan? Cryptocurrency lending offers the following benefits:

  • Use your crypto as collateral. Rather than letting your crypto investment sit idle in a wallet somewhere, using it as collateral for a loan allows you to put it to work in the real world and access the cash flow you need.
  • Few strings attached. Crypto loans are typically "no questions asked". You don't need to explain why you need the money, and there are no conditions on what you can use it for.
  • No credit checks. Most cryptocurrency lending services don't check your credit score or borrowing history. Instead, they consider the amount of collateral you can provide to determine your creditworthiness.
  • Low rates. You can generally expect to find lower interest rates for a cryptocurrency loan than you would get for a personal loan from a traditional lender.
  • Avoid triggering a CGT event. Using crypto as loan collateral allows you to access the value in your crypto assets without triggering a capital gains tax (CGT) event.
  • Fast access to funds. Same-day funding is common with crypto loans. In some cases, you can access the funds you borrow almost instantly.

Risks of cryptocurrency lending

Before applying for a crypto loan, make sure you understand the risks involved:

  • Volatility. Cryptocurrencies are notoriously volatile and market fluctuations can have a big impact on crypto loans. If the market value of your crypto collateral drops sharply, this may push your loan beyond the platform's maximum acceptable LTV, triggering a margin call.
  • No access to your crypto. When you use crypto as collateral, your coins or tokens will be locked away and you won't be able to access them. As a result, you can't use those assets to take advantage of any market movements and trading opportunities.
  • How your collateral is stored. You'll need to surrender control of your crypto collateral to a third party. With this in mind, take note of how and where your coins or tokens will be stored and whether or not the lending platform could be susceptible to hacking.
  • Short loan terms. Many crypto loans come with short repayment periods. Make sure you can afford to pay back the principal and interest within the loan period before borrowing any funds.
  • Not all crypto can be used as collateral. The crypto assets in your portfolio may not necessarily be accepted as collateral. Compare a range of lending platforms to find out which cryptocurrencies you can use to back your loan.
  • Not many platforms allow you to borrow AUD. If you want to use your crypto to borrow funds in Australian dollars, the range of options is limited.
  • Risk of scams. Not all purported cryptocurrency lending platforms are legitimate. Some are scams and if you accidentally send money to one, you may lose your funds.

How to apply for a crypto loan

Here's what you need to do to apply for a cryptocurrency loan:

  1. Consider your needs. Start by calculating how much you can afford to borrow based on the amount of cryptocurrency you're willing to put up as collateral.
  2. Compare crypto loan platforms. Compare interest rates, LTVs, loan fees, loan amounts and collateral protection measures across a range of lending platforms.
  3. Open an account. When you've found the right platform, register for an account. You may need to provide personal details and verify your identity.
  4. Complete a loan application. You'll need to specify the amount you want to borrow, the amount of collateral you will provide and choose a loan term.
  5. Deposit your collateral. Deposit your crypto into the account or wallet specified by the lender.
  6. Receive your funds. You'll receive the loan amount in the currency you requested.

Lending out your cryptocurrency

Many cryptocurrency lending platforms allow you to assume the role of lender. Here's how it works.

You stake your cryptocurrency on the platform for other users to borrow and you earn yield in return. It's a simple way to generate income from your crypto investments while still holding onto your coins and tokens long-term.

However, be aware that there are risks involved. While you can withdraw from your crypto lending account whenever you want in most cases, some platforms don't allow you to access your funds until the borrower has repaid the loan. There's also the risk of losing money if the borrower defaults on the loan or if the value of your crypto drops.

Finally, remember that there are also tax implications to cryptocurrency lending. The yield you earn will need to be included as part of your assessable income on your tax return. Find out more in our cryptocurrency tax guide.

Cryptocurrency lending alternatives

Before deciding whether a crypto loan is right for you, consider other more traditional lending options. These include:

  • Personal loan. A personal loan allows you to borrow between $2,000 and $100,000 and repay it over a period of up to 7 years. You can use a personal loan for a variety of expenses, from buying a car to renovating your bathroom. There are secured and unsecured loans available.
  • Credit card. If you need to make a smaller purchase or you need funds for frequent purchases, a credit card may be your best option. Use our free tools to compare over 270 credit cards today.
  • Line of credit. Also known as a home equity loan, a line of credit lets you use the equity in your home (the difference between the market value of your home and how much you owe on your mortgage) to borrow money. Most lenders will allow you to borrow up to 80% of your property's value.

Of course, if you're not holding your crypto for the long term, you could also consider selling some of your assets to access the Australian dollars you need. Just remember that disposing of cryptocurrency is a CGT event. You need to consider the more affordable option: paying CGT when you cash out some of your crypto or making interest repayments on a cryptocurrency loan.

Bottom line

Cryptocurrency lending is an effective way to put your crypto assets to use in the real world. However, there are risks and drawbacks attached. The main downside for borrowers is the volatility of crypto assets, which means it's worth considering a range of other options before deciding whether a crypto loan is right for you.

Disclosure: At the time of writing, the author holds ADA, ICX, MIOTA, POWR and XLM.

More guides on Finder

Ask an Expert

You are about to post a question on finder.com.au:

  • Do not enter personal information (eg. surname, phone number, bank details) as your question will be made public
  • finder.com.au is a financial comparison and information service, not a bank or product provider
  • We cannot provide you with personal advice or recommendations
  • Your answer might already be waiting – check previous questions below to see if yours has already been asked

Finder only provides general advice and factual information, so consider your own circumstances, or seek advice before you decide to act on our content. By submitting a question, you're accepting our Terms of Use, Disclaimer & Privacy Policy and Privacy & Cookies Policy.
Go to site