Xapo Bank announced a new loan service that lets customers use their Bitcoin as collateral, marking another step in cryptocurrency’s move toward mainstream financial services.
The service allows qualified members to borrow up to $1 million against their Bitcoin holdings, though UK and Australian clients are excluded.
Major Wall Street Firms Join Bitcoin Financing Race
Xapo Bank has become known in the conventional banking sector as an early adopter. During the pandemic-driven BTC frenzy, it became one of the first banks to open a physical headquarters in Europe by settling in Gibraltar, a British overseas territory.
Conventional financial powerhouses are entering the market as cryptocurrency becomes more popular in the United States. Renowned financial bank Cantor Fitzgerald has established a Bitcoin finance section on their own.
According to sources, the company has partnered with crypto companies Anchorage Digital and Copper.co to help its expanding global Bitcoin operation.
Last year, the bank received regulatory license in the UK and started providing interest-bearing BTC accounts in addition to standard banking services.
Xapo Bank Debuts Bitcoin Loans, Calls Out ‘Predatory’ Crypto Lenders
The private bank’s new service allows customers to access up to $1 million in Bitcoin-backed debt.
Read more: https://t.co/rBhwnAHu7g pic.twitter.com/qPtcWOrDgA— Mars Signals (@MarsSignals) March 18, 2025
Coinbase Revives Bitcoin-Backed Loans Through New Partnership
Coinbase previously offered digital currency-backed loans but stopped the service in 2023. The company has now restarted lending through a partnership with Morpho Labs, using decentralized lending protocols.
Their current service allows US users (except those in New York) to borrow up to $100,000 in USDC stablecoins.
BTCUSD trading at $83,618 on the daily chart: TradingView.com
Max Branzburg, Coinbase’s vice president, stated that the product aims to improve the crypto’s usefulness in a decentralized setting. The service streamlines borrowing by eliminating credit checks and fees, though borrowers must keep an eye on their collateral value to avoid liquidation.
The new Coinbase service runs on Base, the company’s Ethereum layer-2 network. When customers take out loans, their crypto collateral is automatically converted to Coinbase Wrapped Bitcoin (cbBTC), a token backed one-to-one by BTC held in Coinbase custody.
Image: Gemini Imagen
Centralized Vs. Decentralized: Different Approaches To Crypto Lending
While some services use decentralized finance (DeFi) protocols, Xapo represents a more traditional, centralized approach. Customers must first get approval from the bank, and their Bitcoin is stored “in a vault until the loan is paid back,” with loan terms extending up to one year.
Seamus Rocca, CEO of Xapo, acknowledged that many long-term crypto holders became wary of crypto-backed lending after witnessing “predatory lending and faulty products” in the market. “That’s why we’re doing things differently,” he said.
These services mostly help Bitcoin holders to acquire cash without selling their assets and generating taxable transactions.
Featured image from Gemini Imagen, chart from TradingView
