As Bitcoin’s influence continues to expand, its value as collateral is becoming increasingly recognized. It is no longer seen as just a speculative investment or a store of value, Bitcoin has emerged as a versatile asset that allows holders to leverage their wealth in ways once reserved for the ultra-wealthy. With a fixed supply of 21 million coins, its scarcity only adds to its appeal, making it a prized asset in today’s financial ecosystem.

With the increasing value of the collateral, more Bitcoin holders are discovering how they can access liquidity without selling, using their Bitcoin to fund investments, buy real estate, pay off debt, go on vacation, and otherwise live life. But with increasing options comes a crucial question: who can you trust to lend against your Bitcoin securely?

In this article, we’ll explore the five key factors to look for when selecting a Bitcoin-backed lender, with expert insights from SALT Lending—the pioneer in Bitcoin-backed loans.

Why SALT Lending?

SALT pioneered the Bitcoin-backed lending market in 2015 after Founder and CEO Shawn Owen faced repeated rejections from banks unwilling to accept Bitcoin as collateral. Since then, SALT has led the way, offering simple and secure Bitcoin-focused lending solutions.

Having navigated multiple market cycles, regulatory challenges from the SEC, and the industry-wide turmoil of 2022 — marked by the collapse of FTX, Celsius, and others — SALT stands as a battle-tested leader. Operating across nearly all 50 U.S. states and over a dozen global jurisdictions, including Canada, Australia, Hong Kong, the UAE, and Switzerland, SALT’s team of experts in Bitcoin, credit, lending, banking, blockchain, and security solidifies its position as a premier name in the growing Bitcoin-backed lending market.

So, what should you look for in a Bitcoin-backed lender? According to SALT Lending, the five key factors are:

1. Proven Expertise You Can Trust

Nothing replaces experience. Given the painful lessons from the failures of Celsius, BlockFi, Terra Luna, and FTX, it’s critical to choose a lender with a proven track record. Experience ensures that a company has developed robust systems, employs knowledgeable professionals, and understands the intricacies of lending in volatile markets. In a landscape filled with short-lived projects and opportunistic players, experience is the most reliable indicator of a lender’s ability to operate successfully.

2. Trust & Transparency

Because of past failures in the industry, trust and transparency are non-negotiable when selecting a lender. You must ensure your lender operates with integrity and aligns with Bitcoin’s core principles.

Bitcoiners need enterprise-grade custody solutions that are secure and utilize industry-leading technologies like MPC (Multi-Party Computation) and Multisig. It is also important to understand the custodians involved and their processes to ensure they leverage best-in-class tools, tech, and security protocols to keep Bitcoin safe. Popular names in the space include Fireblocks, BitGo, Fortress, and Coinbase Custody, to name a few. Key characteristics to look for are:

• That the lender never re-hypothecates your collateral.
• They provide nine-figure insurance policies against loss, theft, and hacks.
• Are managed by teams of highly experienced Bitcoiners dedicated to security and transparency.

Additionally, ensure the lender is legally compliant and properly licensed in the jurisdictions they operate. Compliance with regulations such as the Bank Secrecy Act (BSA), Know Your Customer (KYC), and Anti-Money Laundering (AML) may not be popular, but they demonstrate a lender’s commitment to responsible business practices.

3. Tools, Technology, & Resources

A lender should be more than just a place to borrow cash against your Bitcoin. The best lenders offer education, expertise, and tools to help borrowers make strategic financial decisions. Some key features to look for include:

• Advanced mobile apps and borrower portals
• LTV monitoring and alerting systems
• Seamless collateral movement in and out of wallets
• Easy refinancing options to capitalize on market conditions

Leading lenders continuously innovate, adding new tools and resources that empower Bitcoiners to optimize their financial strategies.

4. Flexible Loan Terms

A quality lender should offer loan terms that fit your needs, not force you to fit their rigid policies. Everyone’s financial situation is unique, and the best lenders understand this. Look for a partner willing to tailor their solutions to your specific requirements. Key terms to consider are:

• No constraints on your ability to pre-pay your loan
• Multiple payment options
• Easy ability to refinance your loan

Experienced lenders achieve flexibility by developing efficient, automated processes in partnership with their custody and capital providers. These efficiencies allow them to offer a broader range of loan terms without introducing operational risks.

5. Competitive Interest Rates

The most experienced lenders have secured low-cost capital relationships by streamlining their custody and collateral management operations. Efficient risk management allows them to offer lower rates to borrowers, especially for:

• Lower LTV (Loan-to-Value) ratios
• Longer loan terms
• Interest payments made upfront

The best lenders strike a balance between competitive rates and flexible terms, ensuring borrowers receive the best possible deal.

Final Thoughts: Choose Wisely, Borrow Smartly

Choosing a Bitcoin-backed lender is one of the most important financial decisions you’ll make. By prioritizing experience, trust, transparency, technology, flexibility, and competitive rates, you can ensure that you’re working with a reliable, battle-tested partner who truly understands Bitcoin and its potential.

SALT Lending remains at the forefront of this industry, offering secure, transparent, and innovative solutions to Bitcoin holders worldwide. Before you borrow against your Bitcoin, make sure you choose a lender who meets these criteria and aligns with your long-term financial goals.

https://x.com/SALTLending
https://saltlending.com/

This is a sponsored story. Please conduct your own due diligence and make an informed decision before taking any action. Bitcoin.com accepts no responsibility or liability.

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