Casascius Loans

[Eodguy149]

Hey everyone,

I have been talking with a well known custodian and a few potential lenders regarding loans for Casascius coins. I am personally interested since a loan does not trigger a taxable event and it is also a way to access liquidity without having to peel or sell coins (especially with premiums as low as they are).

The lenders are interested but one of their main questions is how large the potential market is for this before they invest time and money into it. If you are potentially interested in getting a Casascius coin loan, DM me or comment here and if comfortable give a ballpark estimate of the BTC value you would be interested in getting a loan on. Obviously this is not binding in any way and I will leave it to them to legitimize the process and ensure the safety of all our coins, but this market research would be quite helpful. Thanks  

edit: They could potentially do BTCC, Lealana or any pre-loaded BTC coins as well, I just need to discuss authentication of these with them.

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[windjc]

Hey everyone,

I have been talking with a well known custodian and a few potential lenders regarding loans for Casascius coins. I am personally interested since a loan does not trigger a taxable event and it is also a way to access liquidity without having to peel or sell coins (especially with premiums as low as they are).

The lenders are interested but one of their main questions is how large the potential market is for this before they invest time and money into it. If you are potentially interested in getting a Casascius coin loan, DM me or comment here and if comfortable give a ballpark estimate of the BTC value you would be interested in getting a loan on. Obviously this is not binding in any way and I will leave it to them to legitimize the process and ensure the safety of all our coins, but this market research would be quite helpful. Thanks 

Walk me through this. If someone gets a loan, they are going to have to pay interest on that. How do they pay that back if they never want to access their coins?

[Eodguy149]

Hey everyone,

I have been talking with a well known custodian and a few potential lenders regarding loans for Casascius coins. I am personally interested since a loan does not trigger a taxable event and it is also a way to access liquidity without having to peel or sell coins (especially with premiums as low as they are).

The lenders are interested but one of their main questions is how large the potential market is for this before they invest time and money into it. If you are potentially interested in getting a Casascius coin loan, DM me or comment here and if comfortable give a ballpark estimate of the BTC value you would be interested in getting a loan on. Obviously this is not binding in any way and I will leave it to them to legitimize the process and ensure the safety of all our coins, but this market research would be quite helpful. Thanks  

Walk me through this. If someone gets a loan, they are going to have to pay interest on that. How do they pay that back if they never want to access their coins?

Exactly like any other collateralized loan, the lender holds your collateral and then sends you USD/BTC/USDC and gives you a repayment schedule (principal + interest). You make payments every month and when the loan is paid off you get your collateral back. If you stop making payments for longer than a set period of time, the lender can sell your collateral to recoup the cost of the loan. It's kind of like a car loan, if you stop making payments on your car, the bank will have someone come pick up your car (the collateral), but if you pay off the loan, you own the car outright. Let me know if that wasn't clear enough

[elmejorrematador]

Hey everyone,

I have been talking with a well known custodian and a few potential lenders regarding loans for Casascius coins. I am personally interested since a loan does not trigger a taxable event and it is also a way to access liquidity without having to peel or sell coins (especially with premiums as low as they are).

The lenders are interested but one of their main questions is how large the potential market is for this before they invest time and money into it. If you are potentially interested in getting a Casascius coin loan, DM me or comment here and if comfortable give a ballpark estimate of the BTC value you would be interested in getting a loan on. Obviously this is not binding in any way and I will leave it to them to legitimize the process and ensure the safety of all our coins, but this market research would be quite helpful. Thanks 

Walk me through this. If someone gets a loan, they are going to have to pay interest on that. How do they pay that back if they never want to access their coins?

If you have a 1 btc coin, I do not believe they are going to loan you the current dollar amount, or am I wrong? I checked out a thing on Celcius and to borrow like 20k, i needed to deposit like 1.65 btc with them as collateral. I suppose this is better than selling and potentially having to buy back btc at a higher price. And the interest rates seemed quite reasonable at like 0.7-1%.

[Eodguy149]

Hey everyone,

I have been talking with a well known custodian and a few potential lenders regarding loans for Casascius coins. I am personally interested since a loan does not trigger a taxable event and it is also a way to access liquidity without having to peel or sell coins (especially with premiums as low as they are).

The lenders are interested but one of their main questions is how large the potential market is for this before they invest time and money into it. If you are potentially interested in getting a Casascius coin loan, DM me or comment here and if comfortable give a ballpark estimate of the BTC value you would be interested in getting a loan on. Obviously this is not binding in any way and I will leave it to them to legitimize the process and ensure the safety of all our coins, but this market research would be quite helpful. Thanks 

Walk me through this. If someone gets a loan, they are going to have to pay interest on that. How do they pay that back if they never want to access their coins?

If you have a 1 btc coin, I do not believe they are going to loan you the current dollar amount, or am I wrong? I checked out a thing on Celcius and to borrow like 20k, i needed to deposit like 1.65 btc with them as collateral. I suppose this is better than selling and potentially having to buy back btc at a higher price. And the interest rates seemed quite reasonable at like 0.7-1%.

For BTC a good ballpark estimate is 50% of the value. So $100k in BTC they would give you a ~$50k loan. I am pushing them to consider numismatic value but that is a pretty accurate lower bar. I am working to get specific interest rates but they wanted to see level of demand first.

[KU5H]

The numismatic value and what someone is willing to pay in premium is largely based on the denomination and rarity of the Casascius coin.

Are we talking about brass 1 btc, silver gilt 1 btc etc. ?

[gwu79611]

Hey everyone,

I have been talking with a well known custodian and a few potential lenders regarding loans for Casascius coins. I am personally interested since a loan does not trigger a taxable event and it is also a way to access liquidity without having to peel or sell coins (especially with premiums as low as they are).

The lenders are interested but one of their main questions is how large the potential market is for this before they invest time and money into it. If you are potentially interested in getting a Casascius coin loan, DM me or comment here and if comfortable give a ballpark estimate of the BTC value you would be interested in getting a loan on. Obviously this is not binding in any way and I will leave it to them to legitimize the process and ensure the safety of all our coins, but this market research would be quite helpful. Thanks 

Walk me through this. If someone gets a loan, they are going to have to pay interest on that. How do they pay that back if they never want to access their coins?

If you have a 1 btc coin, I do not believe they are going to loan you the current dollar amount, or am I wrong? I checked out a thing on Celcius and to borrow like 20k, i needed to deposit like 1.65 btc with them as collateral. I suppose this is better than selling and potentially having to buy back btc at a higher price. And the interest rates seemed quite reasonable at like 0.7-1%.

For BTC a good ballpark estimate is 50% of the value. So $100k in BTC they would give you a ~$50k loan. I am pushing them to consider numismatic value but that is a pretty accurate lower bar. I am working to get specific interest rates but they wanted to see level of demand first.

i doubt any one is willing to lend more than 25-30%of BTC value, if you borrow 25kfor 1 btc and the BTC plunges like it did in the past,thenthe lender is screwed!

[BurtW]

The lender is totally protected if the entire transaction is in BTC.  Although I am not sure that is what you are talking about.

Code:

                Borrower     Lender 
Pre Loan:       1 BTC coin   1 BTC
Loan:           1 BTC        1 BTC coin
Conversion:     USD
       

Borrower periodically pays back principle and interest in BTC

If loan is paid off on schedule the 1 BTC coin goes back to the Borrower

If the borrower defaults the Lender keeps the coin (and all payments to date)

All price fluctuation risks are taken by the Borrower, the lenders BTC are fully collateralized during the term of the loan  

[MoparMiningLLC]

for me, I would never do this - this would mean giving someone possession of my collectibles. I see this as the same sort of fallacy as trusting an exchange to be your wallet. It's all good till they have 10 million in physicals that they loaned out 5 million for and then they up and disappear. And that could easily happen in the crypto space. And it has happened many times. Sorry, once you give up your keys, it ceases to be your crypto. You are essentially selling your item and hoping to eventually buy it back once you pay off the loan.

[Evilish]

i doubt any one is willing to lend more than 25-30%of BTC value, if you borrow 25kfor 1 btc and the BTC plunges like it did in the past,thenthe lender is screwed!

Even at 25-30% it seems to be a bit of a risk for the custodian if the loan is in fiat. Given that we have seen BTC lose 80%+ of its value from peak in past. But that's where the numismatic value of the collectibles comes into play too. If the loan is in BTC value it would probably have to be close to 80-90 percent or more.

for me, I would never do this - this would mean giving someone possession of my collectibles. I see this as the same sort of fallacy as trusting an exchange to be your wallet. It's all good till they have 10 million in physicals that they loaned out 5 million for and then they up and disappear. And that could easily happen in the crypto space. And it has happened many times. Sorry, once you give up your keys, it ceases to be your crypto. You are essentially selling your item and hoping to eventually buy it back once you pay off the loan.

^

I would also worry about other potential threats such as a potential fire or theft. Or some employee in the lending firm going rogue and redeeming your private keys (this might not be very likely to happen but you still need to put some level of trust on whoever you're giving possession of your collectibles to). When I keep collectibles under my own watch, I understand all the risks and can take measures to protect myself against those risks. I wouldn't trust a firm or custodian whose sole purpose is to make money to make decisions that are in my best interest.

I personally would never take a loan against my collectibles, but different people have different risk taking tendencies so there might still be market for this. People trust the likes of Celcius and BlockFi to lend their BTC and borrow against their BTC, I imagine there would be a market for what OP is proposing too.

[guigui371]

It looks like a great idea.

As a borrower I would like to borrow up to 0.8btc / Cas
And probably not pay more than 8% per year.


As a lender, I would feel happy with lending up to  0.8BtC per Cas, and liquidation at 0.9btc (if they don't pay interests !), I would also be happy with 8% interest per year in BTC, paid monthly, compounding if unpaid at approved date.

Maybe also a mechanism where the lender gets paid a one-off $100 for the shipment / going to safe deposit box  / setting up the loan structure.
That would prevent people to borrow a cas and return it 3 days later.  

[Steeley]

for me, I would never do this - this would mean giving someone possession of my collectibles. I see this as the same sort of fallacy as trusting an exchange to be your wallet. It's all good till they have 10 million in physicals that they loaned out 5 million for and then they up and disappear. And that could easily happen in the crypto space. And it has happened many times. Sorry, once you give up your keys, it ceases to be your crypto. You are essentially selling your item and hoping to eventually buy it back once you pay off the loan.

I agree with Mopar.

No way I would trust this business. I say buy the best things you can with your current real wealth, versus using debt.

[Eodguy149]

for me, I would never do this - this would mean giving someone possession of my collectibles. I see this as the same sort of fallacy as trusting an exchange to be your wallet. It's all good till they have 10 million in physicals that they loaned out 5 million for and then they up and disappear. And that could easily happen in the crypto space. And it has happened many times. Sorry, once you give up your keys, it ceases to be your crypto. You are essentially selling your item and hoping to eventually buy it back once you pay off the loan.

I totally agree, trusting the service providers is one of the main challenges here. I can't go into detail publicly but the custodian and both the lenders I am talking to are valued at several billion dollars each and do hundreds of millions in transactions per year (one being a publicly traded company with a federal banking charter). Still very much a non zero risk but hopefully that gives some context on their scale. As a service provider they will need to make us feel very comfortable with the arrangement for me to be interested.

This is definitely not an option for everyone, I have been surprised by the level of interest so thanks to all those that reached out! Imagining a world where physical crypto can be loaned against rather than peeled or sold at/below peel value is exciting to me. Also having a trusted custodian help in brokering sales and marketing to a larger audience would be a net benefit for the community imo. I appreciate the input, I will keep you all posted!
 

[BurtW]

Assuming an older coin, I do not know why as a lender you would not loan the entire face value.

If you get an older coin, loaded by Mike himself, and lend 1 BTC for it, the worst case scenario is:

They never make any payments and default on the loan.  In this case you get:

1 BTC
1 BCH
1 BCL
1 BTG
1 BCD
etc, etc.

Of course the only one worth anything, besides the BTC is the BCH but that is currently over $1,000

+ the collectible value, whatever that might be.

Assuming you open the coin and collect the BTC and all the forks, or sell it for the combined value, you make a profit on a completely defaulted loan.

Better case:  the borrower makes some of the payments then defaults.  The lender gets the coin plus all the payments made.

There is basically no risk to the lender if they lend full BTC value on a pre-fork coin.

[Gatorelf]

for me, I would never do this - this would mean giving someone possession of my collectibles. I see this as the same sort of fallacy as trusting an exchange to be your wallet. It's all good till they have 10 million in physicals that they loaned out 5 million for and then they up and disappear. And that could easily happen in the crypto space. And it has happened many times. Sorry, once you give up your keys, it ceases to be your crypto. You are essentially selling your item and hoping to eventually buy it back once you pay off the loan.

yep, I am still trying to get $2k worth of QASH from the Liquid exchange since U.S. account holders were banned

[OgNasty]

There is basically no risk to the lender if they lend full BTC value on a pre-fork coin.

The risk could be the coin's private key is unreadable or maybe an error in the process that led to the address being incorrect and empty.  Also, who holds the coins?  There is potential there for that person to run away, be robbed, die, etc...  There is also significant market risk if we see another giant bubble, you would be unable to cash out because you cannot peel the borrower's coin, nor do you have the loaned funds. 

Personally, I would need a pretty huge APR and a lot of assurances to even consider something like this as a lender.  As a borrower I think you'd have to be trying to game the exchange rate and keep your coin.  A pretty big gamble, but could payoff well for you if the timing is right.  I prefer sporting events, but whatever makes you happy.

[BurtW]

Assumptions made in my previous post:

The coin is legit
The lender holds the coin
The lender has no need or desire to cash out during the term of the loan

[Eodguy149]

Assumptions made in my previous post:

The coin is legit
The lender holds the coin
The lender has no need or desire to cash out during the term of the loan

These lenders run their business on fiat. They denominate the loan in fiat for accounting purposes (even if they send you BTC and ETH they note that as the USD spot price at the time they send to you) and do not want to speculate on the price of BTC. Hence why they give you 50% of the BTC face value at the time of the loan. This allows the price to drop up to 50% before they need to liquidate the collateral or ask you to post additional collateral. At the end of the day they want the loaned USD amount back plus interest. If bitcoin goes up or down they don't want exposure either way if that makes sense.

BlockFi has a great calculator to give you a ballpark estimate: https://blockfi.com/

I get that it's not everyone's cup of tea, but personally being able to get liquidity on a few coins without any exposure to capital gains, buy a house with cash (and potentially refinance and pull out up to 80% of the homes value to invest back into crypto if you want to really leverage), but still be able to capture any value from an increase in BTC value or numismatic value is quite interesting in my opinion.

[BurtW]

Your example makes perfect sense to me.

Assume someone had a 25 BTC coin, currently worth over 1 million, and they expect it to go higher.

They can get a 500K+ loan, buy a house, plane or whatever and still participate in the expected run up in BTC value.

I now understand the use case.

Could be very useful for some coin holders.

[Eodguy149]

Your example makes perfect sense to me.

Assume someone had a 25 BTC coin, currently worth over 1 million, and they expect it to go higher.

They can get a 500K+ loan, buy a house, plane or whatever and still participate in the expected run up in BTC value.

I now understand the use case.

Could be very useful for some coin holders.

Exactly! Glad it helped to clarify. It can be a bit hard to convey some topics clearly on the forum. Here's another example that I've been considering (I'll use larger numbers because it makes the math easier for me! )

Say you have two 25BTC coins worth $2M (lucky you!) and you get a loan for $1M.

You then buy a $1M house in cash. You then refinance and pull 80% of the home value out. You now have a mortgage for $800k which is around ~$3600 a month if you get a 30 year 3.5% interest rate loan.

You then take that $800k, convert it to USDC and lend it with BlockFi (there are tons of providers but using this as they have a great calculator on the site) where they are currently paying $68,800 a year for lending $800k in USDC. This means they pay you $5700 a month in interest, which can go toward paying your mortgage and Casascius coin loan. Let's say the Cas coin loan is $4k a month + $3600 mortgage - $5700 a month you get in interest from Blockfi = You get a million dollar house and get to keep you Cas coin for $1900 a month.