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Bitcoin holders are increasingly leveraging crypto-backed loans to purchase real estate, enabling them to access liquidity without selling their BTC and avoiding capital gains taxes.
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This innovative financing approach is gaining traction among high-net-worth individuals and entrepreneurs who seek to maintain exposure to Bitcoin’s potential upside while acquiring tangible assets.
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According to Mauricio Di Bartolomeo, co-founder of Ledn, “Borrowing using your Bitcoin as collateral doesn’t typically trigger capital gains taxes in most jurisdictions because borrowing against an asset is typically not a taxable event — you are not selling your Bitcoin.”
Discover how Bitcoin-backed loans enable investors to buy real estate without selling BTC, avoiding capital gains taxes while maintaining exposure to crypto’s growth.
Bitcoin-Backed Loans Accelerate Real Estate Purchases with Flexible Terms
Bitcoin-backed lending platforms allow borrowers to secure loans by locking up their BTC at a typical 50% loan-to-value (LTV) ratio, receiving fiat currency or stablecoins in return. This liquidity can be used as a down payment or to finance entire property purchases, often with funding times averaging less than 10 hours. The loan structure offers significant flexibility: interest and fees accrue over the loan term without mandatory monthly payments, and borrowers can repay or renew loans at any time without penalties, provided the LTV remains below 60%. Additionally, if Bitcoin appreciates during the loan period, borrowers may withdraw excess collateral, optimizing their asset management.
Managing Volatility and Risk in Bitcoin-Backed Lending
Volatility remains a key consideration in BTC-backed loans. When Bitcoin’s price declines and the LTV ratio increases, borrowers receive notifications to add collateral to maintain the loan’s health. If the LTV hits 80%, lenders liquidate enough BTC to cover the outstanding loan balance, returning any surplus to the borrower. Importantly, this liquidation process does not reverse the real estate transaction but simply settles the loan, ensuring borrowers retain ownership of their property. This risk management mechanism provides both lenders and borrowers with a clear framework to navigate Bitcoin’s price fluctuations.
Eliminating Credit Checks: Bitcoin as Pristine Collateral
Unlike traditional mortgage financing, Bitcoin-backed loans often bypass credit score requirements, relying instead on the value of the collateral. Borrowers post Bitcoin at a 2:1 collateral-to-loan ratio, giving lenders immediate liquidation rights if collateral value drops. Mauricio Di Bartolomeo emphasizes Bitcoin’s unique qualities as collateral: it is “deeply liquid,” trades 24/7 globally, and enables real-time transactions, making it an ideal asset for securing loans. This model has proven especially attractive in regions like Latin America, the US, and Europe, where regulatory clarity and market demand are evolving rapidly.
Market Adoption and Growth of Bitcoin-Backed Lending
Ledn’s recent figures illustrate the growing popularity of Bitcoin-backed loans, with over $300 million issued in retail loans during Q1 2025 and projections exceeding $1 billion by year-end. Clients have benefited from Bitcoin’s appreciation, earning returns significantly higher than the interest paid on loans, with more than 1,000 BTC withdrawn as excess collateral during price rallies. This trend reflects a broader shift among high-net-worth investors who prefer to leverage their Bitcoin holdings to access hard assets like real estate, rather than liquidate their positions and lose exposure to potential gains.
Industry Perspectives: Growing Confidence in Crypto-Backed Borrowing
Seamus Rocca, CEO of Xapo Bank, highlights increasing market confidence as a driver behind the rise in Bitcoin-backed borrowing. Xapo Bank’s recent launch of a lending product offering up to $1 million in USD loans against Bitcoin collateral exemplifies this trend, catering to qualified clients seeking liquidity without sacrificing their crypto holdings. This development underscores the maturation of crypto finance products and their integration into traditional wealth management strategies.
Conclusion
Bitcoin-backed loans represent a transformative approach for investors aiming to acquire real estate while preserving their cryptocurrency exposure and minimizing tax liabilities. By leveraging Bitcoin as collateral, borrowers can access fast, flexible financing without credit checks, benefiting from a transparent risk management framework that addresses volatility. As adoption grows and market infrastructure strengthens, this financing model is poised to become a mainstream option for crypto-wealthy individuals seeking to diversify their portfolios with tangible assets.
