The evolution of crypto is baked into the DNA of blockchain itself, and today, just buying and selling tokens feels outdated and, frankly, a little boring. One exciting development capturing attention is the rise of crypto-backed loans, a financial innovation that lets users leverage their crypto holdings to access liquidity without having to sell them.
Crypto loans work similarly to traditional secured loans. Instead of putting up a house or car as collateral, users pledge digital assets like Bitcoin (BTC) or Ethereum (ETH) to borrow fiat currencies such as USD. This model opens new possibilities for crypto holders, allowing them to unlock the value of their assets while still staying exposed to potential future gains.
But how exactly do crypto loans work? What are the key benefits and risks? And how does Figure’s offering stand out from the rest?
What Are Crypto-Backed Loans?
In a crypto-backed loan (CBL), borrowers deposit their digital assets as collateral with a lender, who in return provides a loan in fiat or stablecoins. Just like with a mortgage or car loan, the collateral serves as security. If the borrower fails to repay, the lender can liquidate the assets.
Crypto loans offer faster access to funds, greater flexibility, and often fewer requirements than traditional loans. However, they come with their own risks, particularly the volatility of crypto prices. If the value of the pledged assets drops significantly, borrowers may face margin calls or even liquidation unless they add more collateral or repay a portion of the loan early.
How Figure Is Redefining Crypto Lending
Recognizing the growing demand for liquidity without sacrificing market exposure, Figure has introduced a new approach to crypto-backed loans. Their offering allows users to borrow cash against their Bitcoin or Ethereum holdings without the need to sell them. This means users can stay invested in the market’s potential upside while simultaneously accessing the funds they need.
Figure’s loans come with clear and straightforward terms. They have the lowest Interest rates on the market at 8.91% (less than 50% LTV) and 12.4% (up to 75% LTV). Borrowers can access up to 75% of the value of their crypto assets, depending on their risk profile. Each loan has a 12-month term, no prepayment penalties, and most importantly no rehypothecation. This makes the process both accessible and transparent for users looking for flexible liquidity solutions.
Obtaining a loan with Figure is designed to be simple. After depositing their crypto assets, users select their desired loan terms and quickly receive the cash directly into their bank account. Borrowers can opt to pay interest monthly or defer it until the loan’s maturity, although deferring does incur additional fees. However, if the value of the collateral drops during the loan term, Figure will issue a margin call, requiring borrowers either to add more collateral or to partially or fully repay the loan to maintain the required loan-to-value ratio.
Security First: The Power of Decentralized MPC Custody
Security is at the core of Figure’s offering. To protect users’ assets, the platform uses decentralized multi-party computation (MPC) custody, an advanced cryptographic technique that removes single points of failure.
At Figure, your Bitcoin is secured in decentralized MPC wallets which means your Bitcoin never leaves your FM wallet and you can verify directly on-chain so you always know where your Bitcoin is.
This sophisticated security infrastructure blends self-custody principles with institutional-grade safeguards, providing users with peace of mind without requiring them to surrender control over their assets.
Conclusion
Crypto-backed loans, like those offered by Figure, represent a significant evolution in decentralized finance. They empower users to unlock liquidity without sacrificing their investment positions and bring the benefits of speed, flexibility, and security into one seamless experience.
By prioritizing user control, transparency, and institutional-grade protections, Figure is helping to redefine the lending landscape for crypto holders. As the adoption of digital assets continues to grow globally, solutions like these will play a crucial role in bridging the gap between traditional finance and the new digital economy.
To learn more or apply for a crypto-backed loan, visit Figure.
Disclaimers
©2025 Figure Lending LLC
Figure Lending LLC dba Figure 650 S. Tryon Street, 8th Floor, Charlotte, NC 28202. 888) 819-6388. NMLS ID 1717824. For licensing information go to www.nmlsconsumeraccess.org Opens in a new window.. Equal Opportunity Lender For general customer support, call (888) 819-6388 Monday – Friday, 6am – 9pm PT, Saturday – Sunday, 6am – 5pm PT (excluding holidays).
Digital currency is not legal tender, is not backed by the government, and BIA accounts are not subject to FDIC or SIPC protections.
Crypto loans are offered to U.S. borrowers by Figure Lending LLC. This product is not available to U.S. residents of DC, ID, IL, KY, MD, MS, SD, TX, VT, or VA.
Crypto loans are offered through Figure Markets Credit LLC to residents of the state of New York and to international customers except in the following jurisdictions: Crimea (Ukraine), Donetsk (Ukraine), Luhansk (Ukraine), Afghanistan, Albania, Belarus, Central African Republic ,Congo (the Democratic Republic), Cuba, Ethiopia, Haiti, Iran (Islamic Republic of), Iraq, Lebanon, Libya, Mali, Myanmar (Burma), Nicaragua, Nigeria, North Korea (Democratic People’s Republic of), Pakistan, Palestine (State of), Russia, Somalia, South Sudan, Sudan, Syria, Ukraine, Venezuela, Yemen, or Zimbabwe.
Figure Markets Credit LLC. 650 S. Tryon Street, 8th Floor, Charlotte, NC 28202. (888) 926-6259. NMLS ID 2559612. For licensing information go to www.nmlsconsumeraccess.org Opens in a new window.. Figure Lending is not affiliated with Figure Markets Holdings, Inc., Figure Technologies, LLC or any of its subsidiaries.
Crypto Loans starts at a minimum of $5,000, subject to state and jurisdiction-specific legal limitations. Your loan amount will ultimately depend on the amount of collateral in your account and your eligibility will be determined by your state or jurisdiction of residence, credit profile, and other personal information available at the time of your application.
- General minimum and maximum loan amounts may vary subject to state-specific legal limitations.
- The interest rate on Figure’s Crypto-Backed Loan is 8.91% (9.999% APR) at 50% LTV or 11.50% (12.62% APR) up to 75%. The advertised Annual Percentage Rate (APR) is based on a $5,000 loan amount and contemplates the payment of 1% origination fee, which would yield a monthly payment of $42.47. Rates will be higher for applications secured by assets with a higher LTV ratio. The Figure Crypto-Backed Loan has a 12 month interest-only repayment term and allows for a maximum initial LTV ratio of 75%. Interest rates change frequently so your exact interest rate will depend on the date you apply and may depend on many factors such as LTV ratio.
The post The Future of Crypto Lending: Figure Puts Security and Flexibility First appeared first on BeInCrypto.
