12 Jun, 24

Advantages of Borrowing USD with Crypto

borrowing usd with crypto


Cryptocurrency lending platforms have revolutionized the way individuals and businesses access funds. Borrowing USD with crypto involves using your cryptocurrency assets as collateral to secure a loan in USD. This approach offers several advantages, including accessibility, lower interest rates, and the preservation of investment positions. This article will explore these benefits in detail, highlighting why borrowing USD with crypto is an attractive option for many.

Zerocap offers zero-interest loans to borrow USD against your Bitcoin holdings, while protecting the potential downside of your BTC performance. Email our team to learn more*

*This product is for wholesale investors only

borrowing usd with crypto cta banner

Borrowing USD with crypto has become increasingly popular as more people seek ways to leverage their digital assets without liquidating them. Crypto loans allow individuals to access liquidity quickly while maintaining their investment in cryptocurrencies like Bitcoin, Ethereum, and other digital assets. This process can be done through various platforms, including centralized finance (CeFi) and decentralized finance (DeFi) platforms, each offering unique benefits. In this article, we will delve into the primary advantages of borrowing USD with crypto.

1. Access to Liquidity Without Selling Assets

One of the most significant advantages of borrowing USD with crypto is the ability to access liquidity without selling your digital assets. Cryptocurrencies are often seen as long-term investments, and selling them to meet immediate financial needs can be detrimental, especially during market downturns. By using your crypto as collateral, you can obtain USD without losing out on potential future gains from your cryptocurrency holdings.

This approach is particularly beneficial for investors who believe in the long-term appreciation of their crypto assets. Instead of selling their Bitcoin or Ethereum, they can use these assets to secure a loan, meet their financial needs, and repay the loan over time while still benefiting from any potential increase in the value of their collateral.

2. Lower Interest Rates

Crypto loans typically offer lower interest rates compared to traditional loans. This is because the loans are secured by high-value collateral, reducing the risk for lenders. Many platforms provide competitive interest rates, often ranging from 1% to 12% APR, depending on the loan-to-value (LTV) ratio and the type of cryptocurrency used as collateral.

Zerocap’s Colalteralized Bitcoin Loan Product offers BTC holders to borrow USD against their assets at zero interest while protecting their downside performance of BTC. The collar structure earns a premium equivalent to the interest paid on the loan creating a zero-cost structure.

Reach out to our team to learn more about the offer, only available to wholesale investors.

Lower interest rates make borrowing USD with crypto an attractive option for both individuals and businesses. It allows borrowers to save on interest costs, making it a cost-effective solution for financing various needs, such as business expansions, debt consolidation, or personal expenses.

3. No Credit Checks Required

Another significant advantage of borrowing USD with crypto is that these loans do not require credit checks. Traditional loans often involve rigorous credit assessments, which can be a barrier for individuals with poor or no credit history. Crypto loans, on the other hand, are secured by the borrower’s digital assets, eliminating the need for credit evaluations.

This aspect of crypto lending democratizes access to loans, enabling a broader range of people to secure funding. Whether you have a stellar credit score or a less-than-perfect one, you can still obtain a loan as long as you have the necessary collateral in cryptocurrencies.

4. Quick and Easy Loan Processing

Crypto loans offer a streamlined and efficient loan processing experience. Traditional loans can take days or even weeks to get approved and funded. In contrast, crypto loans can often be processed within hours, providing borrowers with quick access to funds. Platforms like Nexo and BlockFi enable users to receive their loan amount almost instantly once the collateral is deposited and the loan is approved.

The ease and speed of obtaining a crypto loan make it an ideal option for those in urgent need of funds. This quick turnaround time can be crucial for meeting unexpected expenses or taking advantage of time-sensitive investment opportunities.

5. Flexible Loan Terms

Borrowing USD with crypto often comes with flexible loan terms, allowing borrowers to customize their loan according to their needs. Many crypto lending platforms offer adjustable loan-to-value (LTV) ratios, repayment periods, and interest rates. For example, borrowers can choose higher LTV ratios to receive larger loan amounts, although this may come with higher interest rates.

Additionally, platforms like Aave and Compound offer decentralized lending options, where smart contracts manage the loan terms, providing transparency and flexibility. Borrowers can repay their loans early without penalties, and in some cases, they can even use flash loans for quick, one-time transactions without collateral.


Borrowing USD with crypto presents a unique and advantageous financial tool for cryptocurrency holders. By leveraging their digital assets as collateral, borrowers can access liquidity quickly, benefit from lower interest rates, and avoid the need for credit checks. The flexibility and efficiency of crypto loans make them an appealing option for a wide range of financial needs. As the cryptocurrency market continues to grow, the popularity and accessibility of crypto-backed loans are likely to increase, offering even more opportunities for individuals and businesses alike.


1. How does borrowing USD with crypto work?

Borrowing USD with crypto involves using your cryptocurrency as collateral to secure a loan in USD. The borrower deposits their crypto assets into a lending platform, which holds the assets until the loan is repaid.

2. What are the risks of borrowing USD with crypto?

The main risks include market volatility, which can affect the value of your collateral, and the potential for liquidation if the collateral value falls below a certain threshold. Additionally, platform security is a concern, as hacks or technical issues could result in the loss of assets.

3. Are there any tax implications for borrowing USD with crypto?

Borrowing against your crypto assets typically does not trigger a taxable event, as you are not selling your assets. However, it’s essential to consult with a tax professional to understand the specific implications in your jurisdiction.

4. Can I repay my crypto loan early?

Yes, most crypto lending platforms allow early repayment without penalties. This flexibility can help you save on interest costs if you can repay the loan sooner than expected.

5. What happens if I default on a crypto loan?

If you default on a crypto loan, the lending platform will liquidate your collateral to recover the loan amount. It’s crucial to manage your loan carefully and ensure that your collateral remains sufficient to cover the loan.

About Zerocap

Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets with industry-leading security, contact our team at [email protected] or visit our website www.zerocap.com


This material is issued by Zerocap Pty Ltd (Zerocap), a Corporate Authorised Representative (CAR: 001289130) of AFSL 340799. Material covering regulated financial products is issued to you on the basis that you qualify as a “Wholesale Investor” for the purposes of Sections 761GA and 708(10) of the Corporations Act 2001 (Cth) (Sophisticated/Wholesale Client). This material is intended solely for the information of the particular person to whom it was provided by Zerocap and should not be relied upon by any other person. The information contained in this material is general in nature and does not constitute advice, take into account the financial objectives or situation of an investor; nor a recommendation to deal. Any recipients of this material acknowledge and agree that they must conduct and have conducted their own due diligence investigation and have not relied upon any representations of Zerocap, its officers, employees, representatives or associates. Zerocap has not independently verified the information contained in this material. Zerocap assumes no responsibility for updating any information, views or opinions contained in this material or for correcting any error or omission which may become apparent after the material has been issued. Zerocap does not give any warranty as to the accuracy, reliability or completeness of advice or information which is contained in this material. Except insofar as liability under any statute cannot be excluded, Zerocap and its officers, employees, representatives or associates do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this material or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this material or any other person. This is a private communication and was not intended for public circulation or publication or for the use of any third party. This material must not be distributed or released in the United States. It may only be provided to persons who are outside the United States and are not acting for the account or benefit of, “US Persons” in connection with transactions that would be “offshore transactions” (as such terms are defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)). This material does not, and is not intended to, constitute an offer or invitation in the United States, or in any other place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. If you are not the intended recipient of this material, please notify Zerocap immediately and destroy all copies of this material, whether held in electronic or printed form or otherwise.
 Disclosure of Interest: Zerocap, its officers, employees, representatives and associates within the meaning of Chapter 7 of the Corporations Act may receive commissions and management fees from transactions involving securities referred to in this material (which its representatives may directly share) and may from time to time hold interests in the assets referred to in this material.  Investors should consider this material as only a single factor in making their investment decision.

Like this article? Share
Latest Insights

12 Jun, 24

Zerocap Partners with Fireblocks: One of their First Institutional Crypto Custody Providers

Zerocap is One of the First Institutional Crypto Custody Providers to Join the Fireblocks Global Custodian Partner Program. Read more in recent articles in Coindesk,

Weekly Crypto Market Wrap, 15th July 2024

Download the PDF Zerocap is a market-leading digital asset firm, providing trading, liquidity and custody to forward-thinking institutions and investors globally. To learn more, contact

Weekly Crypto Market Wrap, 8th July 2024

Download the PDF Zerocap provides digital asset liquidity and digital asset custodial services to forward-thinking investors and institutions globally. For frictionless access to digital assets

Receive Our Insights

Subscribe to receive our publications in newsletter format — the best way to stay informed about crypto asset market trends and topics.

Want to see how bitcoin and other digital assets fit into your portfolio?

Contact Us
Ready to sign up?
Create an Account