Bitcoin Loans Now Fund Tuition, Business Costs Beyond Trading

Bitcoin-backed lending is increasingly becoming a source of mainstream credit, allowing borrowers to unlock liquidity from their BTC holdings without having to sell the asset.

The market is moving beyond its earlier focus on trading, with bitcoin-backed financing beginning to resemble more traditional forms of lending.

Two established lenders told CoinDesk that borrowers are increasingly pledging bitcoin as collateral to cover real-world expenses, including tuition, temporary cash-flow shortages and business working capital.

“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,” Hunter Albright, chief revenue officer of SALT Lending, told CoinDesk. He said those needs include emergency costs and major life expenses, such as paying college tuition or financing a once-in-a-lifetime trip. Borrowers are also using the loans to supplement their cash flow.

The trend reflects a broader change in how digital assets are being used. Bitcoin is increasingly serving as collateral for credit rather than simply as a speculative investment, potentially helping crypto-backed finance build a stronger position in mainstream financial markets.

SALT began offering bitcoin-backed loans in 2016, initially focusing on bitcoin miners that validate blockchain transactions in exchange for BTC rewards. The lender has since seen more institutional borrowers, as well as Gen X and baby boomer bitcoin holders seeking guidance on how the borrowing process works.

SALT did not provide its cumulative loan volume. However, the wider centralized crypto lending sector has grown significantly.

Ledn, a centralized lender launched in 2018, has originated more than $11 billion in loans so far. The company expects that total to reach $1 trillion in the coming years as demand increases for borrowing that is not tied to trading.

Ledn’s growing loan activity and customer base further highlight the expanding use of crypto-backed credit.

“Our borrowers range from traditional investors seeking to get more from their bitcoin position, to entrepreneurs who want to access working capital, to institutional players,” Ledn co-founder and CEO Adam Reeds told CoinDesk.

Reeds said Ledn’s private wealth customers typically borrow larger amounts for purposes such as investments, real estate, businesses and their children’s education.

Retail borrowers generally take out smaller loans to address short-term financial needs, including covering a month of expenses when their regular income is insufficient.

Holding Bitcoin While Borrowing

The main appeal of bitcoin-backed borrowing is the ability to access cash from an investment without selling BTC and giving up exposure to future price gains.

Albright said this has remained central to SALT’s business since its launch.

“We don’t believe people should have to sell their most valuable assets to get the value out of it,” he said.

Ledn customers follow a similar approach.

“People borrow against their bitcoin because they believe it will be worth more in the future, and they also want to be certain they’ll get it back,” Reeds said.

That long-term conviction also contributes to borrowers renewing their loans.

“Most clients renew their loans, because the whole premise of this type of lending is not selling bitcoin and continuing to hold the position,” Reeds added.

Albright said borrowing against assets reflects financial strategies historically used by wealthy individuals and large corporations that are now becoming accessible to a wider group of investors.

“Now, that is becoming available to a broader group of people based on the asset they own and hold,” he said.

Lenders Move Toward Fixed Rates

Lenders are also working to make crypto-backed borrowing more predictable as the sector seeks broader mainstream adoption. SALT, for example, wants its products to operate more like traditional mortgage loans.

“Our ultimate goal is to have loan products behave much more like a mortgage, where someone can take out a loan, at a fixed rate over a longer term and have greater predictability around the cost of borrowing, even while Bitcoin remains volatile,” Albright said.

The industry is already moving in that direction. On Sept. 22, Coinbase introduced fixed-rate bitcoin-backed loans through Morpho’s Midnight protocol in its retail app. Customers can borrow USDC against bitcoin with the interest rate and repayment date established when the loan begins.

The fixed-rate products are offered alongside Coinbase’s existing variable-rate Morpho loans, which have more than $1.4 billion outstanding against approximately $3 billion in collateral.

Coinbase’s fixed-rate products currently have shorter maturities, while SALT is targeting significantly longer loan terms.

Gold Could Be the Next Collateral

Ledn expects the lending model to eventually expand beyond bitcoin to other hard assets, including gold, which has long been used as collateral for accessing liquidity.

“The next stage is lending against hard assets more broadly,” Reeds said, identifying precious metals as a natural extension of the model.

“Gold is the obvious next example. It’s a twenty-trillion-dollar asset, yet borrowing against it has largely been an institutional privilege. For most everyday holders, the way to get cash from gold has been to sell it,” he said.

The shift could further narrow the distinction between digital and traditional alternative assets as investors increasingly seek to hold valuable assets for the long term while borrowing against them instead of selling.

“Our clients increasingly think in terms of hard assets they want to hold for the long term, and borrow against rather than sell,” Reeds said.

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