Investors with cryptocurrency portfolios often face a challenging dilemma.
You might have accrued significant holdings in Bitcoin or Ethereum, but most lenders won’t let you borrow against these assets when you need quick finance.
Selling your crypto would trigger capital gains tax and mean missing out on potential growth.
Crypto-backed bridging loans offer one solution.
These specialist loans let you use your digital assets as collateral for short-term finance, giving you quick access to funds without the need to sell your crypto holdings.
bridging loans
What Are Crypto Backed Bridging Loans?
Crypto-backed bridging loans allow you to borrow money using your digital currency holdings as security.
Unlike standard bridging loans secured against property, these loans use cryptocurrencies like Bitcoin and Ethereum as collateral.
A bridging loan is a short-term funding option designed to ‘bridge’ a financial gap – perhaps between buying a new property and selling an existing one, or securing an auction purchase before longer-term finance is arranged.
Most crypto bridging loans have terms ranging from 3 to 12 months, with loan amounts starting from around £100,000.
How much can you borrow?
For a crypto-backed bridging loan you will be able to borrow in the region of 50-60% of the current valuation.
So, as a minimum, your portfolio needs to be in the region of £170,000 to £200,000.
This low ‘loan to value’ is to allow for future fluctuations in your portfolio’s size.
The actual amount you can borrow depends on the specific type of coins you hold.
The Application Process
Securing short-term finance against cryptocurrency follows a similar path to a normal bridging loan.
As there’s no need for a property valuation, or a charge registered with Land Registry, it’s possible for these loans to be approved within a couple of days.
The first step is to discuss your situation with a specialist bridging finance broker, who will then be able to source the best type of finance for you.
Then you’ll apply to the lender, sharing details about your cryptocurrency holdings and the amount you wish to borrow. The lender will assess your digital assets’ value and determine how much they’re willing to lend against them. Most lenders offer between 50% and 60% of your crypto’s value.
Next comes verification.
You’ll need to prove ownership of your cryptocurrency and demonstrate its source, helping the lender meet anti-money laundering requirements. This involves showing purchase records, exchange statements, and wallet addresses.
Once approved, you’ll transfer your cryptocurrency to a secure third-party custodian storage. You won’t be able to access these assets while they are supporting your loan.
The lender then sends the money to your bank account. During the loan term, you have the option to make monthly interest payments, though some lenders offer options to ‘roll up’ the interest and pay everything at the end.
For example, if you hold £1 million worth of Bitcoin and need £500,000 for a property purchase, a lender might offer you 60% or £600,000. You’d transfer Bitcoin worth £1 million to secure storage, receive £500,000 in sterling or dollars, and be charged interest until you repay the loan and reclaim your Bitcoin.
When the loan term ends, you’ll need an ‘exit strategy’ – a way to repay the borrowed amount.
This might come from selling a property you purchased, refinancing to a long-term mortgage, or using other funds.
Once the loan is repaid in full, your cryptocurrency is returned to you.
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Who Offers These Loans?
Finding lenders who offer cryptocurrency backed bridging loans requires looking beyond the mainstream banks.
Most haven’t entered this market yet, leaving it largely to specialist lenders and fintech companies who better understand digital assets.
Several specialist short-term lenders have begun accepting cryptocurrency as collateral, though their approaches vary significantly.
Smart borrowers will work with a specialist broker who can help them find a loan scheme that works for them.
Most of these finance houses only work with brokers and intermediaries, making them harder to track down if you don’t already have a working relationship.
How Do They Differ from Standard Bridging Loans?
Cryptocurrency linked bridging loans share the core purpose of bridging finance—providing short-term funding solutions—but differ in several significant ways.
Different Security Structure
The most obvious difference is the collateral type.
Standard bridging loans use physical property as security, with the lender taking a legal charge over it.
Crypto backed loans instead use digital assets held in secure custody arrangements. This fundamental difference affects everything from valuation approaches to risk assessment and loan monitoring.
Price Fluctuations
Property values fluctuate relatively slowly, with market changes measured in months rather than minutes.
Crypto values can shift dramatically within hours, creating unique risk dynamics. To manage this volatility, crypto bridging lenders implement safeguards like lower loan-to-value ratios, margin call provisions, and sometimes daily collateral value monitoring—features not needed with property-secured loans.
Documentation
While both loan types require thorough due diligence, the documentation differs quite a bit.
Standard bridging focuses on property titles, valuations, and planning permissions.
Cryptocurrency bridging requires proof of digital asset ownership, source of funds verification, and often blockchain transaction analysis to satisfy anti-money laundering requirements.
Speed
Though both loan types offer faster completion than a mortgage, crypto backed loans can sometimes move even more quickly than standard bridging.
Without a physical property to survey and with digital assets that can be transferred instantly, the process can sometimes take just a few days.
Shared Purpose
Despite their differences, both loan types serve the same fundamental purpose—providing quick access to capital for time-sensitive opportunities.
Both are designed as flexible, short-term solutions with clear exit strategies rather than long-term financing.
Interest Rates
Interest is charged monthly and crypto loans will have higher interest rates, reflecting both their innovative nature and the additional lending risks.
Eligibility
Meeting the eligibility criteria for cryptocurrency backed bridging loans involves several specific requirements unique to this type of finance.
Portfolio size
You’ll need enough cryptocurrency to serve as security for the loan.
With minimum loan amounts often starting at £100,000 and loan-to-value ratios typically around 60%, you’ll need digital assets worth substantially more than your borrowing needs.
Proving ownership
Proving legitimate ownership of your cryptocurrency is essential.
UK anti-money laundering regulations require verification that cryptocurrency wasn’t obtained through illegal means.
This means providing exchange records of purchases, bank transfers to cryptocurrency platforms, tax returns showing declared crypto assets, and wallet transaction histories.
Exit Strategy
These loans are only for the short-term.
Lenders want to know exactly how you plan to repay the loan when it matures.
If you’re using the bridging loan to purchase property, your exit might be selling that property or refinancing to a standard mortgage.
Acceptable Cryptocurrency
Not all digital currencies qualify as suitable collateral for these loans.
Most lenders only accept established cryptocurrencies with high market capitalisation, liquidity, and trading volume.
Bitcoin and Ethereum are universally accepted. A few may accept major altcoins such as Solana, Cardano, or Polkadot if they have sufficient market depth.
Credit History
As with normal bridging loans, your credit history is not the lender’s primary concern.
They focus more on your collateral value, quality and exit strategy.
Serious credit problems could still affect your application with more conservative lenders.
Why Choose Crypto Bridging
Most bridging loans are secured against a house or commercial property. So why would anyone need a crypo-linked bridging loan?
Tax efficiency tops the list for many borrowers.
When you sell cryptocurrency in the UK, the profits are subject to Capital Gains Tax – up to 20% for higher rate taxpayers.
By borrowing against your crypto instead of selling it, you avoid triggering this tax liability while still accessing your digital wealth.
You also maintain your position in the market. If you believe your coins will increase in value, keeping ownership while accessing liquidity gives you the best of both worlds.
Speed of funds is a popular reason.
Cryptocurrency bridging loans can be arranged in just a few days – essential when bidding at auction, settling a bill or securing time-sensitive deals.
For business owners, these loans provide working capital without diluting company ownership.
Rather than seeking equity investment that reduces your stake, you can use personal crypto holdings to inject funds while maintaining full control.
Understanding the Risks
While these loans are quick to arrange and flexible, they aren’t without risk.
Price volatility heads the list of concerns.
Digital asset prices can swing dramatically – sometimes losing 10% or more in a single day.
If your collateral value drops substantially during the loan term, lenders can issue a margin call, requiring you to either add more cryptocurrency collateral or partially repay the loan.
The security of your crypto coins needs to be considered. You’re trusting the lender or their custody partner to keep your digital assets safe from hacks or theft.
Interest rates for crypto backed bridging are a bit higher than for standard bridging loans.
This reflects both the relative newness of these products and the additional perceived risk. These higher costs need to be factored into your investment calculations.
Exit strategy failures present perhaps the biggest practical risk.
If your plan to repay the loan falls through – perhaps a property doesn’t sell in time or at the expected price – you could face default scenarios where your crypto collateral is liquidated at an unfavourable time.
How a Broker Adds Value
Trying to find and negotiate these types of short-term loans without a broker will be extremely difficult.
A broker on your side can offer:
Access to Lenders
Brokers with experience in this niche have relationships with multiple lenders who accept cryptocurrency collateral. Many of these lenders work exclusively through broker channels and aren’t accessible directly. This means a good broker can open doors to financing options you couldn’t access independently.
Expert Help
The documentation requirements for crypto backed loans can be daunting. Proving cryptocurrency ownership and source of funds in a way that satisfies UK anti-money laundering requirements takes specialist knowledge. Experienced brokers understand exactly what evidence lenders need and how to present it effectively.
Loan Structuring
A broker can also structure your loan optimally. They’ll consider factors like loan-to-value ratios, term length, interest payment options, and exit strategy to create an arrangement that matches your specific needs. This tailored approach often results in better terms than a standard application.
Skilled Advocacy
When issues arise during the application process – perhaps questions about cryptocurrency sources or exit strategy viability – experienced brokers can advocate effectively on your behalf. Their understanding of both traditional finance and cryptocurrency markets allows them to address concerns that might otherwise derail your application.
Next Steps
If you’re interested in exploring cryptocurrency backed bridging loans first speak with an adviser who has experience in cryptocurrency backed finance.
They can assess whether this approach makes sense for your specific circumstances and connect you with appropriate lenders.
Many of the lenders aren’t located in the UK and have specific requirements about the type of coins they will accept and the overall value.
These loans work best for investors who strongly believe in the long-term value of their cryptocurrency holdings, have a clear exit strategy, and need rapid access to funds for specific opportunities.
find a brokerFAQ
How much can I borrow?
Most lenders offer between 50% and 60% of your cryptocurrency’s value as a loan-to-value (LTV) ratio.
For example, if you hold £500,000 worth of Bitcoin, you might be able to borrow between £250,000 and £300,000. Minimum loan amounts typically start around £100,000, with some lenders focusing exclusively on high-net-worth clients seeking larger amounts.
How long does it take to arrange a cryptocurrency loan?
The process is fast as there’s no property surveys or property charges involved.
It’s possible to get a loan approved within just a few days.
What happens to my crypto during the loan term?
Your cryptocurrency is transferred to a secure storage arrangement controlled by the lender or a third-party custodian.
You retain ownership rights but cannot access or trade these assets until the loan is repaid. The specific security arrangements vary between lenders.
What happens if the value of my cryptocurrency drops during the loan term?
If your crypto value falls significantly, the lender will typically issue a “margin call,” requiring you to either provide additional cryptocurrency collateral or partially repay the loan to maintain the agreed loan-to-value ratio.
If you cannot meet this requirement, the lender may liquidate some or all of your collateral to protect their position.
Can I get a bridging loan with bad credit?
Yes.
What is a margin call?
A margin call occurs when the value of your crypto investments drop below a certain threshold set by the lender.
When this happens, the lender will contact you requiring either additional cryptocurrency collateral or a partial loan repayment to restore the agreed LTV ratio.
For example, if you initially borrowed £300,000 against £500,000 of Bitcoin (60% LTV), and Bitcoin’s value falls to £400,000, your LTV would increase to 75%.
Failing to meet a margin call could result in the lender liquidating some or all of your collateral to protect their position.
Which cryptocurrencies are acceptable?
Lenders accept only a limited range of cryptocurrencies as collateral for bridging loans.
Bitcoin (BTC) and Ethereum (ETH) are universally accepted due to their established market position, high liquidity, and relatively stable trading patterns.
A few lenders may consider top-tier altcoins such as Solana (SOL), Cardano (ADA), and Polkadot (DOT), but only if they have sufficient market capitalisation and trading volume.
Smaller altcoins, meme coins like Dogecoin and Shiba Inu, and newer tokens are generally not accepted due to their unpredictable price movements, limited liquidity, and higher risk profile.
Can I use Bitcoin to buy a house?
As with all investments, you can’t buy a property with the investment asset, you would need to sell it first.
Once you’ve done that then it should be possible to use the proceeds to buy a house.
