Bitcoin-backed loans fund tuition and cash flow, SALT and Ledn executives say
In brief
- Borrowers increasingly use BTC-backed loans for real-world expenses, SALT and Ledn executives told CoinDesk.
- Ledn, launched in 2018, says it has funded more than $11 billion in loans.
- Ledn projects its loan total will reach $1 trillion in the coming years.
- SALT, lending against bitcoin since 2016, didn't disclose its total historical loan volume.
- Most Ledn clients renew their loans to keep holding bitcoin, Reeds said.
From miners to boomers
SALT started offering bitcoin-backed loans in 2016, and its first customers were bitcoin miners. That's changed. Hunter Albright, the lender's chief revenue officer, told CoinDesk that SALT has recently seen more institutional borrowers, along with older bitcoin holders who wanted help getting through the loan process.
"What I am seeing, both in the conversations I'm having and in the data, is that more people are starting to borrow against their Bitcoin for real-world needs. That includes emergency expenses and larger life decisions, such as funding college tuition or a once-in-a-lifetime trip. We also see people using it to supplement their cash flow," Hunter Albright, chief revenue officer of SALT Lending, told CoinDesk.
SALT didn't disclose its total historical loan volume.
Ledn's $11 billion, and a $1 trillion target
Centralized lender Ledn, which launched in 2018, has funded more than $11 billion in loans to date, according to CoinDesk. The company expects that total to hit $1 trillion in the coming years as more clients opt for non-trading loans (that's Ledn's own projection, not an independent estimate).
Co-founder and CEO Adam Reeds told CoinDesk the borrower base breaks into two groups. Private wealth clients take out large amounts for investments, real estate, businesses or their children's education. Retail clients borrow smaller sums for near-term needs, like covering a month of expenses when their main income falls short.
Why borrow instead of sell?
It comes down to exposure. Borrowers can unlock liquidity from bitcoin they're holding without selling it, and Reeds said most Ledn clients renew their loans because the whole premise is to keep holding BTC rather than exit the position.
Lenders are also moving toward more predictable borrowing costs, according to CoinDesk, and SALT's aim is to make its crypto loans behave more like traditional mortgages.
Bitcoin traded at $82,663.51 at the time of CoinDesk's report.
Frequently asked questions
Why do people borrow against bitcoin instead of selling it?
The main reason, as described in CoinDesk's report, is getting liquidity without selling bitcoin and losing exposure to the asset. Ledn CEO Adam Reeds said most of the lender's clients renew their loans because the goal is to keep holding bitcoin.
What are bitcoin-backed loans being used for?
Executives at SALT Lending and Ledn told CoinDesk the loans are increasingly funding real-world expenses such as tuition fees, slow months and business cash. Ledn's private wealth clients borrow for investments, real estate, businesses or education, while retail clients borrow smaller amounts to cover short-term gaps in income.
How much has Ledn lent against bitcoin?
Ledn, which launched in 2018, has funded more than $11 billion in loans, according to CoinDesk. The company projects that total will reach $1 trillion in the coming years as more clients choose non-trading loans. That figure is Ledn's own projection.
