Most people think of their crypto as either something they hold or something they sell. But there's a third option that's become increasingly practical: using your crypto as collateral to borrow against it.
The crypto-backed lending market hit $73.6 billion in Q3 2025 (yahoo!Finance), a figure that reflects how the concept has grown. Yet many holders still aren't sure exactly how it works, when it makes sense, or what the real risks are.
In this guide, you'll learn:
- What a crypto-backed loan is and how it differs from selling your crypto
- How the borrowing process works, step by step
- Key terms explained — LTV, margin calls, liquidation, origination fees
- Which crypto assets can be used as collateral
- Real-world examples of who uses these loans and why
- The risks to understand before you apply
- How to decide whether a crypto-backed loan is right for your situation
The Basic Idea
A crypto-backed loan works similarly to any secured loan you'd recognise from traditional finance. When you take out a mortgage, the property secures the debt. When you get a car loan, the vehicle does. With a crypto-backed loan, your digital assets — BTC, ETH, stablecoins, and others — act as the security.
You pledge a portion of your crypto holdings as collateral, and in return you receive cash without needing to sell your assets. Your crypto stays in your name throughout, locked with the lender until the loan is repaid.
What makes this different from a traditional loan is the absence of the usual friction. No bank appointment, no income verification, no weeks of waiting. The approval process is based on your collateral, not your credit history.
How It Works, Step by Step
The process is more straightforward than most people expect:
- Choose your collateral: the crypto you want to use to secure the loan (e.g. BTC, ETH, USDC)
- Select your loan amount: determined by the Loan-to-Value ratio, or LTV (explained below)
- Receive funds in your wallet: once the loan is issued, EUR or USDC is credited to your Nebeus wallet
- Make repayments: monthly interest, interest-only, or a single payment at maturity, depending on which loan type you choose
- Get your collateral back: once the loan is fully repaid, your crypto is released and returned
Once approved, funding is typically available within hours. For EU users, you can then transfer funds from your Nebeus wallet to your IBAN account in seconds — making it a practical bridge between your crypto holdings and everyday fiat expenses.
The Key Terms to Know Before You Start
Loan-to-Value (LTV)
This is the ratio between what you borrow and what your collateral is worth. If you deposit €10,000 in BTC and the LTV is 50%, you can borrow €5,000. A higher LTV gives you more cash but leaves a smaller buffer if the market moves.
Margin Call
If the value of your crypto collateral drops significantly, the lender may issue a margin call — a request to deposit additional collateral to maintain the agreed LTV ratio. If you fail to do so, they might liquidate part or all of your collateral.
Liquidation
The risk most borrowers want to understand clearly. If your collateral drops below the liquidation threshold and you don't act, the lender sells enough of it to cover the outstanding balance and loan will close. This is the main risk with volatile assets like BTC or ETH — and the reason LTV management matters.
Origination Fee
A one-time fee charged when the loan is issued, deducted from the first disbursement. On Nebeus, this is 2% across all loan products.
Interest Rate
The cost of borrowing, expressed as an annual rate. On Nebeus, rates run from 4% on the StableLoan up to 16.5% on the highest LTV tier of a Flexible Loan — depending on the product, term, and collateral you choose.
Two Real-World Examples
Example 1: The BTC holder with a one-off expense
You hold 0.5 BTC, currently worth €20,000, and need €8,000 to cover a renovation. You'd rather not sell — partly because of the tax implications, partly because you expect BTC to appreciate over the next 18 months.
With a Flexible Loan at 50% LTV, you can borrow up to €10,000 against that BTC. You take €8,000, make monthly repayments over the agreed term, and at maturity your BTC is returned — assuming the market didn't drop far enough to trigger a margin call in the interim. Your position stays open throughout.
Example 2: The freelancer earning in stablecoins
You're a freelancer based in Spain, paid in USDC by international clients. You need EUR for rent, groceries, and local bills. Selling your USDC each month works, but it creates a taxable event every time and requires repeated KYC across different platforms.
A StableLoan lets you borrow EUR at 95% LTV against your USDC — efficiently, with a fixed 4% interest rate — keeping your stablecoin position intact while covering everyday expenses in fiat. Because USDC doesn't fluctuate, the liquidation risk is negligible.
These aren't edge cases. They're precisely the situations crypto-backed loans are built for.
Who Are These Loans Actually For?
The long-term holder with meaningful BTC or ETH exposure who needs short-term liquidity without permanently reducing their position.
The expat or digital nomad earning in stablecoins who needs fiat for local expenses in Europe without repeatedly converting crypto and triggering tax events.
The active trader looking to increase exposure to BTC or ETH without injecting fresh capital — using a product like the Mirror Loan to amplify their position.
The business owner or freelancer with predictable future income (a client payment, a bonus, an asset sale) who needs to bridge a cash-flow gap now.
For a detailed breakdown of which loan type fits each of these profiles, read: Types of Crypto Loans Explained
The Risks You Should Understand Before Applying
No financial product is without trade-offs, and crypto-backed loans are no exception.
Collateral volatility.
If you're using BTC or ETH as collateral, a sharp market downturn can push your LTV above the margin call threshold quickly. The StableLoan sidesteps this entirely — but for loans backed by volatile assets, monitoring your position is part of the deal.
Interest cost compounds over time.
A loan that makes sense over six months can become expensive over two years. Before you commit to a longer term, model your total repayment cost against the benefit of keeping your crypto position open.
Liquidation carries an additional fee.
On Nebeus, a 4.5% liquidation fee applies if your collateral is liquidated. This adds to the cost of being caught off guard by market movements, which is why understanding your LTV buffer before you borrow matters.
Repayment flexibility varies by product.
Some loan types, such as the Bullet Loan and the Interest-Only Loan, don't offer early repayment. Others, like the Flexible Loan, do — with a 2.5% early repayment fee for loans under €75,000. Always check the specific terms of the product you're applying for before committing.
Is It Worth It?
That depends entirely on your situation. A crypto-backed loan is a practical tool when you need liquidity, you understand the product you're using, and you've thought through how you'll manage repayments and LTV. It's not a shortcut, and it's not a product to take lightly.
The best starting point is always understanding your options. From the StableLoan's tax-efficient simplicity to the advanced mechanics of the Mirror Loan, each product is built for a different type of user and a different financial need. The next post in this series goes deeper into exactly that — comparing each loan type side by side so you can identify which structure fits your situation.
→ Explore Nebeus loan products
Ready to apply? Start here
Next in the series: Types of Crypto-Backed Loans: Which One Is Right for You? — Read it here
Disclaimer: This article is for informational and educational purposes only. It does not constitute financial, investment, or tax advice, nor an offer or recommendation of any product. Always consult a qualified financial or tax professional before making decisions involving financial products or crypto assets. Product terms and availability may vary depending on your country of residence and regulatory status.
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