Gibraltar-based Xapo Bank is stepping into the crypto lending arena with a new product that allows clients to borrow up to $1 million in U.S. dollars using Bitcoin as collateral. Announced on March 18, the offering aims to serve long-term BTC holders who want liquidity without having to part with their crypto assets.
“This product is tailored for long-term Bitcoin hodlers seeking cash flexibility while retaining ownership of their BTC,” said Xapo Bank CEO Seamus Rocca in a statement shared with Cointelegraph.
Unique Non-Rehypothecation Model for BTC Collateral
A standout feature of Xapo’s lending platform is its non-rehypothecation policy—a move designed to ensure that clients’ BTC collateral is not reused or leveraged by the bank. Instead, all pledged Bitcoin is stored securely in Xapo’s institutional-grade BTC vault, utilizing multiparty computation (MPC) custody for enhanced security.
“Unlike traditional assets, Bitcoin is an ideal form of collateral — it is borderless, highly liquid, available 24/7, and easily divisible, making it uniquely suited for lending,” Rocca added.
Flexible Repayment and Global Access
Eligible clients can select repayment periods of 30, 90, 180, or 365 days, with no penalties for early repayment, according to Xapo. The offering is available to pre-approved members based on key criteria such as the amount of Bitcoin held and the duration of their holdings, targeting long-term BTC investors with a buy-and-hold strategy.
While the loan service is open to global clients across regions like Europe and Asia, it excludes U.S. residents due to regulatory constraints.
Xapo Bank’s Regulatory Compliance and Market Positioning
Xapo Bank operates under the Gibraltar Financial Services Commission and expanded its regulatory reach in 2024 by passporting its banking license in the United Kingdom, granting full access to the UK market through the Xapo Bank App.
Despite the broader European reach, Xapo clarified that crypto lending is not currently governed by the EU’s Markets in Crypto-Assets (MiCA) regulation, highlighting the evolving nature of crypto-related financial services within regulated banking environments.
By entering the crypto lending space with a compliance-first, BTC-friendly approach, Xapo Bank is positioning itself as a pioneer in offering secure, collateralized lending solutions tailored to the needs of long-term Bitcoin investors.
