Bitcoin-backed loans open the real estate market to crypto-rich, tax-free

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Bitcoin holders leverage crypto-backed loans to buy real estate without selling a single sat while sidestepping capital gains taxes.

The emerging trend is gaining momentum among early crypto adopters, entrepreneurs, and high-net-worth individuals who are “Bitcoin wealthy” but often don’t meet the traditional criteria for real estate financing, Mauricio Di Bartolomeo, co-founder of Ledn, told Cointelegraph.

Bitcoin-backed lending models allow borrowers to leverage their crypto without divesting. Since taking a loan doesn’t typically count as a taxable event, clients can access liquidity while retaining upside exposure.

“Borrowing using your Bitcoin as collateral doesn’t typically trigger capital gains taxes in most jurisdictions because borrowing against an asset is typically not a taxable event — you are not selling your Bitcoin,” Di Bartolomeo said.

Bitcoin loans fund homes fast

To secure a Bitcoin (BTC) loan, clients lock up BTC at a typical 50% loan-to-value (LTV) ratio and receive fiat or stablecoins. The average funding time for one lender is 9.6 hours, Di Bartolomeo said. These funds are then used either as a down payment or to cover the entire cost of a property.

The model also offers some flexibility. Interest and fees accrue over the loan term, with no mandatory monthly payments. Repayment can occur anytime without penalties, and loans can be renewed if the LTV remains under 60%. Borrowers also retain the right to withdraw excess collateral if Bitcoin appreciates during the loan term.

Di Bartolomeo said that Ledn’s Bitcoin loans have found strong adoption in Latin America, the US, and parts of Europe. “The beauty of Bitcoin as collateral is that it is borderless,” he said.

A recurring concern with BTC-backed loans is volatility. “As Bitcoin price drops and the LTV increases, clients will receive notifications to send additional collateral,” Di Bartolomeo explained.

If the LTV reaches 80%, the lender sells the necessary amount of BTC to repay the loan, returning any remainder to the borrower. Since the real estate transaction has already occurred, a liquidation doesn’t reverse the property purchase — it simply settles the loan.

Bitcoin as collateral, no credit check needed

Traditional lenders often shy away from crypto due to regulatory uncertainty and credit risk. However, Di Bartolomeo said Bitcoin loans can bypass the need for credit scores entirely. Borrowers post 2:1 collateral, and lenders can liquidate instantly if the value falls.

“We believe Bitcoin is the world’s most pristine collateral. It trades 24/7, it is deeply liquid, and transactions can be sent globally in real-time,” Di Bartolomeo noted.

Ledn issued over $300 million in retail loans in the first quarter of 2025 and is on pace to exceed $1 billion by year’s end, the firm said. Furthermore, in 2024, clients earned eight times more from Bitcoin’s appreciation than they paid in interest, with over 1,000 BTC withdrawn as excess collateral when prices climbed.

Di Bartolomeo added that more and more high-net-worth individuals are turning to Bitcoin-backed loans. Rather than cashing out, they are leveraging their BTC holdings to access hard assets like real estate, maintaining exposure to what they view as their best-performing investment.

“They want to keep the exposure to their highest and best performing asset, and still get to enjoy moving into a new property without selling their Bitcoin."

In May, Seamus Rocca, CEO of the Gibraltar-based private bank Xapo Bank, said Bitcoin holders are becoming more comfortable borrowing against their crypto as market confidence grows.

On March 18, Xapo Bank launched a lending product that allows users to borrow US dollars using their Bitcoin as collateral. With the product, qualified clients can access up to $1 million in loans while keeping their BTC.

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