Xapo Launches Bitcoin-Backed USD Loans for Long-Term Holders

Xapo Bank has introduced a new Bitcoin backed US dollar loan product aimed squarely at long-term Bitcoin holders. Announced today, this offering allows pre-approved clients to borrow up to $1 million while retaining ownership of their Bitcoin assets. Based in Gibraltar and regulated by the Gibraltar Financial Services Commission, Xapo Bank is positioning itself as a trusted player in the evolving crypto financial landscape, catering to a global clientele spanning Europe, Asia, and beyond—though notably excluding US residents.

The launch comes as a calculated step to meet the growing demand among Bitcoin enthusiasts who prefer liquidity without parting with their holdings. Xapo Bank CEO Seamus Rocca emphasized the unique advantages of Bitcoin as collateral, describing it as borderless, highly liquid, and available around the clock. This makes it an ideal fit for lending, particularly for those with a steadfast commitment to holding their cryptocurrency through market cycles. With repayment options ranging from 30 to 365 days and no penalties for early settlement, the bank is offering flexibility tailored to its users’ needs.

A Secure Approach to Crypto Lending

What sets Xapo’s offering apart is its commitment to security and transparency. Unlike some traditional lending models, the bank does not rehypothecate client collateral, meaning the Bitcoin pledged by borrowers remains untouched and securely stored in Xapo’s institutional-grade vault using multiparty computation custody.

This approach addresses a key concern for cautious borrowers wary of asset misuse. Additionally, the bank has implemented risk management features, such as instant notifications if Bitcoin’s price dips, allowing clients to top up collateral or make repayments to avoid liquidation. These measures reflect a deliberate effort to rebuild trust in a sector scarred by past turmoil.

The eligibility for these loans hinges on specific criteria, primarily the size and duration of a client’s Bitcoin holdings. Xapo is targeting individuals and institutions with a long-term investment mindset, aligning the product with the ethos of the “hodler” community. This focus underscores the bank’s strategy to cater to high-net-worth individuals and sophisticated investors seeking to leverage their Bitcoin without selling it outright.

While the offering extends across regions like the European Union—where Xapo successfully expanded its banking license to the UK in 2024—it operates outside frameworks like the Markets in Crypto-Assets regulation, highlighting the still-evolving nature of crypto lending oversight.

The timing of this launch is noteworthy, arriving years after the crypto lending industry weathered a brutal storm in 2022. That year, the collapse of Terra and a punishing bear market brought down major players like Celsius and BlockFi, leaving borrowers and lenders reeling. Rocca acknowledged this backdrop, noting that today’s borrowers are more discerning, gravitating toward platforms with robust custody practices and transparent operations. Xapo’s decision to eliminate rehypothecation and bolster security aligns with this shift, positioning it as a forward-thinking option in a cautious yet recovering market.

Founded by Argentine entrepreneur Wences Casares—once dubbed “Patient Zero for Bitcoin in Silicon Valley” by LinkedIn co-founder Reid Hoffman—Xapo brings a decade of crypto expertise to the table, reinforcing its credibility as it ventures deeper into lending.

For long-term holders, Xapo Bank’s latest offering presents a compelling way to unlock liquidity while staying true to their investment philosophy. As the cryptocurrency market matures, initiatives like this could pave the way for a more stable and accessible financial ecosystem, blending the best of traditional banking with the promise of digital assets.