Bitcoin loans are paying for tuition and working capital, not just trades, lenders say

Bitcoin-backed lending is evolving into a mainstream source of credit, with borrowers using BTC to access liquidity without selling.

Bitcoin-backed finance is maturing beyond trading and increasingly resembles traditional lending.

Loans taken by locking up bitcoin BTC$83,207.05 as collateral are increasingly used to fund real-world expenses such as tuition fees, slow months, and business cash, according to two long-standing lenders.

"What I am seeing, both in the conversations I'm having and in the data, is that more people are starting to borrow against their Bitcoin for real-world needs. That includes emergency expenses and larger life decisions, such as funding college tuition or a once-in-a-lifetime trip. We also see people using it to supplement their cash flow," Hunter Albright, chief revenue officer of SALT Lending, told CoinDesk.

This signals a profound shift in how digital assets are used. Bitcoin is no longer viewed merely as a vehicle for speculation. Instead, it serves as collateral for credit, a critical development for alternative finance as it works to establish and strengthen its mainstream appeal.

SALT, which began offering bitcoin-backed loans in 2016, initially catered to bitcoin miners—the entities that verify transactions on the blockchain in return for BTC rewards. More recently, however, the lender has seen an influx of institutional borrowers, alongside "Gen Xers and baby boomers who own bitcoin and want help understanding the loan process."

While SALT did not disclose its total historical loan volume, the broader centralized lending market is posting massive figures.

Centralized lender Ledn, which debuted in 2018, has funded more than $11 billion in loans to date. The company expects that figure to grow to $1 trillion in the coming years as more clients opt for non-trading loans.

Ledn’s lending activity and growing borrower base also point to the increasing mainstream adoption of crypto-backed loans.

"Our borrowers range from traditional investors seeking to get more from their bitcoin position, to entrepreneurs who want to access working capital, to institutional players," Adam Reeds, co-founder and CEO of Ledn, told CoinDesk.

He explained that Ledn's private wealth clients borrow large amounts for "larger tickets such as investments, real estate, their businesses or their children's education."

Retail clients, meanwhile, pull smaller amounts for near-term needs, like covering a month of expenses when primary income falls short.

The primary motivation for borrowing against BTC is to unlock liquidity from a passive investment without having to sell and lose exposure to the asset.

Albright noted that SALT's core purpose has not changed since inception. "We don’t believe people should have to sell their most valuable assets to get the value out of it," he said.

"People borrow against their bitcoin because they believe it will be worth more in the future, and they also want to be certain they'll get it back," Reeds said.

That conviction is also the reason why Ledn’s clients keep renewing their loans.

"Most clients renew their loans, because the whole premise of this type of lending is not selling bitcoin and continuing to hold the position," Reeds added.

According to Albright, financial strategies that the ultra-wealthy and large corporations have used for centuries are finally democratizing. "Now, that is becoming available to a broader group of people based on the asset they own and hold," he said.

To solidify this mainstream shift, lenders are moving toward providing predictable costs, with SALT aiming to make crypto loans behave more like traditional mortgages.

"Our ultimate goal is to have loan products behave much more like a mortgage, where someone can take out a loan, at a fixed rate over a longer term and have greater predictability around the cost of borrowing, even while Bitcoin remains volatile," Albright said.

Major industry players are already validating this direction. On Sept. 22, Coinbase added fixed-rate bitcoin-backed loans to its retail app through Morpho's Midnight protocol. Users can borrow USDC against bitcoin with the interest rate and repayment date set at the outset. The fixed-rate options sit alongside its existing variable-rate loans on Morpho, which boast more than $1.4 billion outstanding against roughly $3 billion in collateral.

Coinbase's fixed-rate loans, however, are short-dated, SALT is aiming for much longer terms.

Looking ahead, Ledn sees this collateralization model expanding beyond bitcoin to gold, a traditional safe-haven asset already used worldwide to unlock liquidity through loans.

"The next stage is lending against hard assets more broadly," Reeds said, pointing to precious metals as the logical evolution.

"Gold is the obvious next example. It's a twenty-trillion-dollar asset, yet borrowing against it has largely been an institutional privilege. For most everyday holders, the way to get cash from gold has been to sell it," Reeds said.