Gibraltar residents can now borrow up to $1 million with their Bitcoin as collateral thanks to Xapo Bank, a private bank on the British overseas territory. It means that customers can access cash without having to liquidate their Bitcoin. But this service won’t be provided to people in the UK and Australia.
However, in the world of banking, Xapo Bank has been an early supporter of Bitcoin. It set up a headquarters in Gibraltar, a British territory in Europe, during the Bitcoin boom in recent years. With this new loan service, the bank wants to assist Bitcoin owners to have access to funds without losing their crypto investments.
Other large financial companies are joining in. A Wall Street bank that’s well known as Cantor Fitzgerald, is starting a Bitcoin finance division, and has partnered with crypto firms such as Anchorage Digital and Copper.co.
Meanwhile, Bitcoin backed loan service runs at Coinbase and Coinbase a popular cryptocurrency exchange. This time, it is working on a decentralized system with Morpho Labs. In the U.S (except for New York), customers can borrow as much as $100,000 in USDC stablecoin without credit checks and without any additional fees.
Unlike Coinbase, which offers loans capitalised out of blockchain technology, Xapo does it traditionally take a banking approach. However, for loans, borrowers must get approval and their Bitcoin is locked in a vault until repaying the loan. Seamus Rocca, Xapo’s CEO, said that their aim is to provide a safe option away from dangerous crypto lending practices.
Bitcoin holders have a way to get cash from their holdings without necessarily falling into the selling and paying of extra taxes.
Also read: Japan Takes Bold Step to Reform Crypto Rules for Stablecoins and Brokerages
