Xapo Bank

What happens if BTC drops.

The single most important question on a Bitcoin loan. With Xapo Bank, liquidation is a managed process. If your loan-to-value rises toward the liquidation threshold below, Xapo Bank works through margin calls before any collateral is sold.

At Xapo Bank's 40% opening LTV, BTC would have to fall 50% before a position opened at that LTV reaches the 80% liquidation threshold.

Cure window: Human-managed (no fixed grace period).

What Xapo Bank publishes: Conservative 40% LTV with human-managed liquidation. Warning at 50% LTV, formal margin call at 65% LTV. Human review process provides flexibility that automated liquidation cannot. No specified grace period — managed case by case.

The terms, translated.

With Xapo Bank, the “contract” is the loan agreement and the platform’s risk parameters. We've pulled the key terms from Xapo Bank's own data and translated them into plain English.

How Xapo Bank compares to its closest cousins.

The org, the founder, the governance.

Xapo’s public borrow page says the current loan interest rate is 10.5% and that there are no arrangement, setup, closure, or liquidation fees. The FAQ says members can borrow up to 40% of BTC collateral with 30, 90, 180, or 365-day terms, and that access is invite-only for selected members. Current public pages say residents of the United Kingdom and Australia do not have access to Bitcoin-backed loans.

The 8-factor breakdown.

Custodial. Scores 7/10 (solid) on the custody axis. Non-custodial designs score highest because no third party can move collateral; custodial designs lose points proportional to operator discretion.

Policy: none. Scores 10/10 (strong). "Strict" / "no-rehypothecation" policies score highest because collateral cannot be lent out; "permitted" policies lose points for exposure to counterparty failure on the re-pledged BTC.

Scores 8/10 (solid). Programmatic on-chain liquidation at a fixed LTV scores highest (predictable, no operator discretion); discretionary or off-chain liquidation processes lose points proportional to opacity and timing risk.

Regulatory status: licensed. Scores 10/10 (strong). US/EU-regulated lenders with explicit licensing score highest; offshore or DAO-governed entities lose points because there's less recourse if something goes wrong.

No public reserves reporting. Scores 8/10 (solid). Without auditable reserves disclosure, depositors have no independent confirmation that the assets exist and are unencumbered.

Scores 8/10 (solid). Lenders that publish operating reports, smart-contract code, and live rate/LTV parameters score highest; those that bury terms in PDFs or change rates without notification lose points.

13+ years operating since 2013. Scores 10/10 (strong). Older operations with surviving stress events (March 2020, Nov 2022, etc.) score highest; younger or untested operations lose points proportional to how many full cycles they've operated through.

Scores 9/10 (strong). Loan agreements with explicit liquidation order, segregated-account language, and clear borrower recourse score highest; ambiguous default terms lose points.

Questions readers actually ask about Xapo Bank.