Crypto-backed loans: 5 things to know in 2026

Bitcoin doesn't have to be a passive investment. Under the right circumstances, it can also be utilised to provide you with a line of credit for a range of other purposes.

Crypto investors are attracted to the field for a range of reasons. New tech, interest in economic philosophy and spotting new opportunities in the market have all fuelled interest, arguably in equal measure.

But one of the ongoing challenges has been how to put that investment to work. The tech applications are also still in their early stages.

For those who are of the HODL mentality, this isn't an issue. But for those looking to take a more active approach to their assets, it can be a point of frustration.

Enter crypto-backed loans.

Crypto-backed loans are a relatively new arrival into the Australian loan landscape. Although using assets as security is a common practice when taking out a loan, many traditional lenders have been sceptical about accepting cryptocurrency as loan security due to the market's volatility.

But some crypto platforms are providing crypto investors with lending opportunities, like Swyftx.

Though they can offer opportunity, it's important to remember that there is also risk attached. With this in mind, we're taking a look at some of the must-knows about crypto-backed loans.

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1. How do crypto-backed loans work?

In principle, crypto-backed loans work in the same way as any other loan that requires security. However, there are a few practical differences.

To take out a loan with Swyftx, you'll need to sign up to Swyftx and apply for a crypto-backed loan.

You'll also need to own cryptocurrency to be eligible -- in Swyftx's case, this must be Bitcoin specifically.

Your application is credit-assessed under responsible lending obligations; this means that Swyftx will undertake a credit check and will need to verify your income and expenses via the appropriate paperwork to assess whether you are suitable for the loan.

Just to be clear -- approval is not guaranteed at this stage.

However, if you are approved, you will need to lock the required Bitcoin as your security. This means it cannot be traded or withdrawn while the loan is active.

Similarly, if there is a dip in the value of your Bitcoin, you may be required to "top up" your security. We'll talk a bit more about how this works in a moment.

After approval, funds are sent to your nominated bank account within 24 hours of you providing your Bitcoin security. You're then able to use the funds you've received for your nominated purpose.

2. How much can you borrow with a crypto-backed loan?

The exact amount you can borrow will depend on a few factors, including:

• The limits set by the lender
• Your existing credit history
• Your current income and expenses
• The amount of crypto you can offer for security

Swyftx offers crypto-backed loans ranging from $2,000 to $100,000 AUD, depending on the value of your security and lender approval.

Additionally, Swyftx offers a maximum loan-to-value ratio (LVR) of 40%.

This means that you can borrow up to 40% of the value of your security, provided you've met all of the other criteria.

Let's do some quick math as an example.

If you have $100,000 AUD worth of Bitcoin, that means you might be able to borrow up to $40,000 AUD via Swyftx.

3. What can a crypto-backed loan be used for?

The specifics of how you can use a crypto-backed loan will generally depend on the lender. Some lenders will allow you to use funds however you want, provided repayments are made. This may be offset by higher interest rates attached to the loan or lower borrowing limits.

However, a Swyftx crypto-backed loan has clear conditions in place for how one of its crypto-backed loans can be used. There are five ways they can be used:

• Home improvements: Such as, renovations to your property
• Vehicle purchases: Buy a new or used vehicle
• Holidays: Travel for yourself or with your family
• Non-financial investment: Purchases such as gold bullion, luxury consumer goods, art, antiques, or collectibles (e.g. fine wine, a classic car held as a collectible), fine jewellery, watches, loose gemstones.
• Gifts: Gifts can also be purchased, along similar lines to non-financial investment.

It's no secret that the crypto market can shift drastically; providing clear usage guidelines can help reduce risky financial behaviour on part of the borrower, while also ensuring the lender understands how you intend to use the loan.

4. How are crypto-backed loans repaid?

Crypto-backed loans are repaid in a similar fashion to any other loan. You've got a set period of time to pay back the full amount, and you'll be charged interest based on the length of the loan and how much you owe.

Let's take a look at a Swyftx crypto-backed loan as an example.

• Line of credit

A crypto-backed loan with Swyftx is a line of credit. However, unlike some other lines of credit you may have encountered, the borrowed funds are paid out as a lump sum straight away. You don't draw on it periodically, and interest is payable on the full amount.

• Repayments

Swyftx doesn't require regular repayments like some other loans. However, the full amount (including interest and any fees) must be paid by or at the end of the 12-month loan period.

• Interest

Interest is calculated daily and compounded every 30 days, at a fixed rate of 9.50% p.a. (comparison rate 11.93%). So the longer you take to make repayments, the more interest you'll repay overall.

You can see a more detailed rundown of some of the key loan features below.

5. What are the risks of a crypto-backed loan?

Crypto-backed loans can be a way to leverage crypto assets for other purposes. But it's crucial to remember that there are also risks attached.

Asset depreciation

The crypto market moves quickly and it can be extremely volatile. This means that if your crypto dips in value, you may need to "top up" your security with additional cryptocurrency or AUD. In extreme circumstances, your security may be sold by the lender to recoup losses.

Regulatory issues

Crypto-backed loans are relatively new territory and regulatory issues can arise if you're not using a reputable provider. Make sure you look for a provider that has the appropriate licenses and credentials to operate in Australia.

Tax implications

Using your crypto for loan security may also have tax implications. If you're considering this approach, it may be worth seeking independent professional advice ahead of time.

Learn more about crypto loans with Swyftx today

*Refer to https://www.finder.com.au/finder-awards/customer-satisfaction-awards/crypto-trading-platform-satisfaction for more information on Finder Awards and relevant methodology.

^Interest rate is indicative and your rate may be different based on a variety of factors, including your credit worthiness. For approved applicants only. Rates are subject to change. The comparison rates are based on a secured loan of $10,000 over a term of 3 years. The comparison rate provided includes a 2% origination fee. WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Approved applicants only. Lending criteria, T&Cs and fees apply. Credit provided by Web3 Loans Pty Ltd (ACN 668 516 952), managed by Web3 Ventures Pty Ltd T/A Block Earner (ACN 655 090 869) under Australian Credit Licence 542689. Swyftx Pty Ltd (ACN 623 556 730) is an authorised Credit Representative (Credit Representative Number 579667) of Block Earner.