A lot of bitcoin backed collateral loans being offered

[Free Market Capitalist]

All these bitcoin collateral loans appear more like a trap to me set by the centralized exchange than offering actual help.

First, please correct the misspeling on the title. They are not "blacked", they are backed.

Those types of loans became popular during the last bull run. Saylor was one of the biggest users of them. And there were people who took out these loans when the price was at $125K, thinking it would keep rising, only to be liquidated when the price fell.

Strategies like that should only be used by big investors—I'm talking about people with millions of dollars. The problem is that there are people who try it with just a few thousand dollars—which is all they have—and end up getting burned.

[Renampun]

snip
All these bitcoin collateral loans appear more like a trap to me set by the centralized exchange than offering actual help.

Indirectly, it is like that.. even though the loan is so simple because you only need your Bitcoin as collateral and then get USDT in return, the LTV they charge is 65% of your Bitcoin.. that means you don't get the full value of your Bitcoin as a loan.. if the price falls significantly, you could still face a liquidation risk, and also keep in mind that the loan will incur interest + fees if you don't pay it off on time and your position gets liquidated.. here, the one who benefits is Binance because they can recover the loan by selling the collateral + fees, while you could end up losing part of your Bitcoin.

[boyptc]

~snip~

They seem to be just changing the term on "fee", well, trying to be something cool in this market, we can't blame them. They market it soft but fee already hit before you even use the USDT.

That's a way for them in introducing new product.

Changing terms of processing fee into "promotional fee" which is only for that tweet but if you go on the actual article, that's not a promo.

But I think this is depends on each use cases, especially if you need like emergency loan or you need cash immedaitely and dont want to sell your Bitcoin, you can avail this.
But for me, I rather sell a bit of Bitcoin if I need cash, than put collateral back on an exchange. Not your keys still apply once that BTC sit there.

Really depends if someone is in dire need and don't have any other option but also don't want to sell their bitcoins.

They can take it back and pay on the terms that they've agreed with. Me either, I'd rather sell and won't have to think of the fees if I have to.

If there's a credit limit and score, maybe those who are used to it might do something within it and sees it as an advantage.

[davis196]

What is the collateral-loan ratio? Is it a 150% collateral, for example using 1500 USD worth of BTC to borrow 1000 USDT? I don't want to click on the Binance URL in the tweet and I don't have a Binance account. It seems to me that Binance simply wants you to default on such loans, so that they could get the BTC in your crypto exchange account. "Plenty of things worth buying" with a thousand USDT? I can't think of many things, that can be bought with 1000 USDT. The people, who left comments under that tweet and making fun of this so called ad.

[GreatArkansas]

~snip~

They seem to be just changing the term on "fee", well, trying to be something cool in this market, we can't blame them. They market it soft but fee already hit before you even use the USDT.

That's a way for them in introducing new product.

Changing terms of processing fee into "promotional fee" which is only for that tweet but if you go on the actual article, that's not a promo.

But I think this is depends on each use cases, especially if you need like emergency loan or you need cash immedaitely and dont want to sell your Bitcoin, you can avail this.
But for me, I rather sell a bit of Bitcoin if I need cash, than put collateral back on an exchange. Not your keys still apply once that BTC sit there.

Really depends if someone is in dire need and don't have any other option but also don't want to sell their bitcoins.

They can take it back and pay on the terms that they've agreed with. Me either, I'd rather sell and won't have to think of the fees if I have to.

If there's a credit limit and score, maybe those who are used to it might do something within it and sees it as an advantage.

If I need cash quickly, I just sell small amount, that's it. Since the fee is more on percentage, then for sure people that doing this don't mind these kind of fees especially those big time loaners. Credit limit feel maybe nice for people used to banks, but for me this still collateral loan on exchange. Once I need cash I just sell a bit of BTC, simpler.

[FinneysTrueVision]

The initial terms do not seem to bad but there is always a catch. 0.5% is a reasonable fee and the liquidation LTV ratio is a generous 91%. However, there is a fixed 30 day term, which is very short and almost seems designed to force many people into defaulting or being overdue.

According to their FAQ, if someone does not repay their loan within 30 days, they are charged penalty interest at an APR of 36%. In reality this is a high interest loan in a roundabout way.

Is there any penalty interest if my loan repayment is overdue?

Yes. If your loan is not fully repaid by the due date, a penalty interest will accrue daily on the overdue outstanding balance at an annualized rate of 36%.

[The Founding Titan]

While it doesn't really seem like the best of ideas to use your bitcoin as collateral, it actually beats the alternative of having to sell, your coin remains your own as long as you pay the loan but if you sold your coin to pay for whatever immediate needs you had then you would have to consider buying again later and the price or bitcoin will have shifted at that point, seeing as you won't know which direction the price shift will go it's better to take the loan instead.
Though I would like to say that this option should be explored if you are sure there is a way to pay off the loan later because if you can't pay back the loan then it would have been better to just sell your coin from the beginning than for it to be taken from you due to your loan being defaulted.

[ABCbits]

https://x.com/binance/status/2100223565421240740

With Lite Loan, borrow up to 1,000 USDT using your BTC as collateral.

Lite Loan  
$1,000 is a very big fund with many people, not a lite fund.

It depends on where you live. On US (where USD is used), it could be a week income.

Median weekly earnings of the nation's 121.5 million full-time wage and salary workers were $1,204 in 2025. Women had median weekly earnings of $1,089, or 82.1 percent of the $1,326 earned by men.

The initial terms do not seem to bad but there is always a catch. 0.5% is a reasonable fee and the liquidation LTV ratio is a generous 91%. However, there is a fixed 30 day term, which is very short and almost seems designed to force many people into defaulting or being overdue.

According to their FAQ, if someone does not repay their loan within 30 days, they are charged penalty interest at an APR of 36%. In reality this is a high interest loan in a roundabout way.

Is there any penalty interest if my loan repayment is overdue?

Yes. If your loan is not fully repaid by the due date, a penalty interest will accrue daily on the overdue outstanding balance at an annualized rate of 36%.

You just describe how loaning apps without strict screening make profit. I wouldn't be surprised if their app/website also doesn't show the deadline date easily or give any notification for upcoming deadline.

[Patikno]

Snipped

There is nothing worth giving your bitcoin for, even if you are rest by an urgent need, I will not suggest that you stick your Bitcoin for any collateral assets, when you have your bitcoin you have your freedom and control over it and at the same time can be profitable as long as you keep holding it, assign a particular amount of your coins on other portfolio unit have in order for it to serve as your decisional backup coins for any urgent use than depending on collateral assets loans.

In my opinion, using Bitcoin as collateral isn't a great idea, especially when dealing with centralized exchanges.

The reality is that you don't truly hold the Bitcoin; don't have full control over it, or you risk losing that control entirely. I think it is should be better to sell other assets, or different types of cryptocurrency if you are facing an urgent need, or emergency. Selling other valuables you no longer use is another option; that is a more practical approach than jeopardizing your Bitcoin holdings for the future. Plus, there are plenty of other, more helpful alternatives; such as leveraging a business, or securing a loan against securities, property, and so on.

[bitLeap]

As much as possible I will keep bitcoin but in the end the situation is urgent and do not want to sell bitcoin then the loan option makes sense. I am quite open with some options although most people feel this is risky but when no one is willing to give you a loan offline this may be the only way where we can actually take bitcoin again with a fixed amount.

[Rockstarguy]

https://x.com/binance/status/2100223565421240740

Plenty of things worth buying.

Very few worth selling your BTC for.

With Lite Loan, borrow up to 1,000 USDT using your BTC as collateral. No price-triggered liquidation in the first 30 days.

0.5% promotional fee for a limited time

I stumbled upon these ad on X today, which was also reposted by CZ, about using your bitcoin in your exchange balance (which is, in the first place, it's wrong to hold bitcoin in an exchange balance) to borrow a pegged dollar which you can spend. According to the ads there is no interest attached to it which sounds strange to me, 0.5% fee don't seem to be convincing enough as what they will only take from the clients.

All these bitcoin collateral loans appear more like a trap to me set by the centralized exchange than offering actual help.

Will I say this loan app is an enemy to hodlers because they can be a serious challenge to hodlers who are struggling to hold Bitcoin? There are some investors who are getting used to Bitcoin, and they can easily be attracted to this offer because their understanding of Bitcoin is not as solid as those who will never sell their Bitcoin irrespective of their needs. All these loan apps asking for Bitcoin as collateral will do more harm than good.

Not everyone is good at paying loans. Some people might try their best to pay back loans before they are due, but in doing this, it can affect them badly because it is not easy to pay loans. While some people like to pay loans when they are due, companies that are doing loan business and collecting Bitcoin as collateral understand that people will fall for this.

[buwaytress]

So if you don't think it's worthwhile, why post it? (Not malice here, plain curiosity). Zhao seems to have been emboldened by a bit of freedom now, guess he still needs his Binance pensions.

I probably would take advantage of something similar if I needed some cash on hand. Would prefer to do it P2P though. I trust people here on this forum more than anything like Binance...

[Reid]

Is that really the wise thing to do or just selling Bitcoin to use it was in fact the better choice? It's meant to be a currency or an asset which means we can use it anytime we want. Since selling it is an available option, we could actually just do it directly than putting ourselves on a bigger problem with some interest that will come in.
There is always a chance to buy it back but if we badly need the money then we should use it as how it was meant to be used. Even if there's a lot of loans using Bitcoin as a collateral, I'd prefer just doing what I just said.

[drangos]

I believe the most telling comparison is not just to borrow vs. hold Bitcoin. But borrowing vs. selling some of the Bitcoin. A loan will not change the BTC position. But will also impose a repayment requirement and pose a counterparty risk as the BTCs are no longer in your control. The 30-day safeguard against price-fueled liquidation appears convenient. However it will not eliminate the necessity to pay back the loan or even the risks once the 30 days time period is over. If the person has a steady income and a definite repayment plan. It might be legitimate for them to take out a loan on BTC. If they are not present, the possession of the BTC may be easier.

[TheUltraElite]

The exchange is taking bitcoin and giving you USD as a loan.

Obviously every person who will take a loan out of excitement will not be able to return the loan within 30days. That is one of the things that the exchange wants to happen. The ones who default, they will have sold their BTC at a discounted price to the exchange, what a bad way to lose to the exchange, that is.

Second is the inherent risk of storing coins on exchange - not your keys means not your coins. If the exchange was to shut down all of a sudden you all will have your coins locked up.

[SilverCryptoBullet]

The exchange is taking bitcoin and giving you USD as a loan.

Obviously every person who will take a loan out of excitement will not be able to return the loan within 30days. That is one of the things that the exchange wants to happen. The ones who default, they will have sold their BTC at a discounted price to the exchange, what a bad way to lose to the exchange, that is.

They're smart. USD does not grow in value but bitcoin does it very strongly with time. Business has their treasury in fiat currency like US dollar, gold, stablecoins like Tether USDT or Circle USDC, and some top altcoins, but by taking bitcoins as collateral from users, exchanges take the best cryptocurrency. If anything bad with users, exchanges will have bitcoin, and they will not lose anything, because as said bitcoin value and price grow upwards considerably with time.

Second is the inherent risk of storing coins on exchange - not your keys means not your coins. If the exchange was to shut down all of a sudden you all will have your coins locked up.

It's a classic risk with centralized exchanges and online platforms.
Reminder: do not keep your money in online accounts
Events made you scare about custodial wallets, centralized exchanges.
Exchange graveyard.
List of hacked exchanges since 2011.

[Davidloki]

As much as possible I will keep bitcoin but in the end the situation is urgent and do not want to sell bitcoin then the loan option makes sense. I am quite open with some options although most people feel this is risky but when no one is willing to give you a loan offline this may be the only way where we can actually take bitcoin again with a fixed amount.

It's important to make proper findings about these bitcoin backed collateral loans before making a move, because there are so many scam projects out there that could use these method to gain access to one's wallet. This is too good to be true, offering a loan offer without collateral, isn't that suspicious?

Paying back loans is not always easy for most people, what are the circumstances involved with late payment? Are there T&C that would be signed before loan disbursement? These are important questions that should be answered before anyone should consider such offer.

[Obim34]

Obviously every person who will take a loan out of excitement will not be able to return the loan within 30days. That is one of the things that the exchange wants to happen. The ones who default, they will have sold their BTC at a discounted price to the exchange, what a bad way to lose to the exchange, that is.

The first rule of taking loans is taking from where it is flexible. Taking from an exchange that has zero flexibility on their agreement is just a way to victimize those who will patronize the service if they fail to repay the exact amount that was borrowed.

If the exchange should recover their funds from the collateral, the exchange will move the Bitcoin to their reserves instead of selling it for stablecoin, now they hold Bitcoin, which will be worth much more when the price increases. $1K worth of Bitcoin removed can be worth $2K-$3K in the months ahead.

The loan initiative isn't bad, since it is no interest, but it depends on the borrower whether they will repay exactly when due. And the fear of keeping a huge amount of coin in an exchange is still a hard decision, despite Binance being the biggest CEX operating.

[stompix]

These are 30 day loan, so to simulate a one year loan with interest rate you would lose 6% in service fees which you could consider similar to interest. So while it is an improvement compared to the competitors and the offer is a bit different, it is still not that great.

When you mean competitors, do you include traditional banks that offer 0% interest over 45 days in this category or do we exclude them  
Without me needing to trust Binance with my coins, without me needing to have any kind of coins, without the risk of losing 2.5 times the sum I got as a loan if the market crashes?
If you got a job and you got a good score, those type of collateral loans are just non-sense.

Obviously every person who will take a loan out of excitement will not be able to return the loan within 30days. That is one of the things that the exchange wants to happen. The ones who default, they will have sold their BTC at a discounted price to the exchange, what a bad way to lose to the exchange, that is.

Nope, this is not how it works.
Once you go past that deadline, the interest becomes 36% per year, since the LTV is 40% it will take about 3 years of non-payment to trigger liquidation.

[Dr.Bitcoin_Strange]

No price-triggered liquidation in the first 30 days.

0.5% promotional fee for a limited time

All these bitcoin collateral loans appear more like a trap to me set by the centralized exchange than offering actual help.

The "No price-triggered liquidation in the first 30 days" Is just to make some people who really need this loan to become more interested but what's the following terms and conditions after that first. 30 days is over, it's something that the lenders should first confirm before taking the loan.  Then, the 0.5% fee is limited until 4th of October which they will increase to 10% after that day. This is really a high risk for someone that doesn't want to hand out their Bitcoin to centralized exchange and also the risk of losing your Bitcoin after 30 days, the exchange is just going to sell your coin assuming price drops by -10% or -20%.

For those individuals that can actually meet up to the terms and conditions of this loan, then it might be an advantage to them, however "not your key not your coin" Is constant.