Bitcoin holders are finding a novel way to move from digital assets to physical homes without selling a single satoshi. A growing number of high-net-worth individuals and early crypto adopters are turning to bitcoin-backed loans to purchase real estate, sidestepping both traditional credit checks and capital gains taxes in the process.
“Borrowing using your Bitcoin as collateral doesn’t typically trigger capital gains taxes in most jurisdictions because borrowing against an asset is typically not a taxable event you are not selling your Bitcoin,” said Mauricio Di Bartolomeo, co-founder of crypto lender Ledn, in a statement to Cointelegraph.
For many, this approach represents the best of both worlds: access to fiat liquidity and continued exposure to what they see as their best-performing investment. The strategy is becoming particularly popular among those whose net worth is tied up in crypto and who may not qualify for traditional real estate loans.
How Bitcoin-Backed Loans Work
The mechanics are relatively simple. Borrowers lock up their Bitcoin, currently trading around $105,620, at a typical 50% loan-to-value (LTV) ratio and receive either fiat currency or stablecoins. These funds can then be used as a down payment or to purchase a property outright.
According to Di Bartolomeo, the average funding time for a loan through Ledn is just 9.6 hours. The loan terms are flexible, often requiring no monthly payments. Instead, interest and fees accrue over time, and borrowers can repay at any point without penalty. If the value of Bitcoin rises during the loan period, clients are even entitled to withdraw excess collateral.
“The beauty of Bitcoin as collateral is that it is borderless,” Di Bartolomeo added, noting that adoption is strong in Latin America, the U.S., and parts of Europe.
Managing Volatility: Risk Without Repossession
Of course, Bitcoin’s well-known volatility remains a concern. If the price drops and the LTV rises, borrowers are notified to post more collateral. Should the LTV hit 80%, lenders are authorised to sell part of the BTC to settle the loan.
Still, Di Bartolomeo emphasised that this doesn’t jeopardise the real estate transaction. “Since the real estate transaction has already occurred, a liquidation doesn’t reverse the property purchase; it simply settles the loan,” he explained.
The system allows lenders to sidestep the credit risk that typically deters banks from dealing with crypto. “We believe Bitcoin is the world’s most pristine collateral. It trades 24/7, it is deeply liquid, and transactions can be sent globally in real-time,” Di Bartolomeo said.
No Credit Check, No Problem
Unlike traditional financing methods, these loans don’t require credit scores. That’s because the collateral Bitcoin is posted at a 2:1 ratio, giving lenders a substantial safety cushion. Instant liquidation in the case of volatility ensures that exposure is tightly managed.
This model has proven successful. Ledn reported issuing more than $300 million in retail loans in Q1 of 2025 alone and expects to surpass $1 billion by year’s end. In 2024, the firm’s clients reportedly earned eight times more from Bitcoin’s appreciation than they paid in loan interest. Over 1,000 BTC were withdrawn as excess collateral during the year as prices climbed.
Di Bartolomeo believes that the surge in popularity is not just about avoiding taxes or bureaucracy; it’s about preserving upside. “They want to keep the exposure to their highest and best-performing asset and still get to enjoy moving into a new property without selling their Bitcoin.”
Financial Institutions Catch On
Traditional banks are starting to take notice. In March 2025, Gibraltar-based Xapo Bank launched its own Bitcoin-collateralized lending product, allowing qualified clients to borrow up to $1 million in U.S. dollars while holding onto their BTC.
Seamus Rocca, Xapo’s CEO, said the rise in Bitcoin-backed borrowing reflects growing market confidence. “Bitcoin holders are becoming more comfortable borrowing against their crypto,” Rocca noted.
As the market matures, Bitcoin is evolving from a volatile asset to a cornerstone of new-age financial tools tools that are opening up high-value markets like real estate in ways never seen before. For the Bitcoin-rich, owning property no longer means selling the crown jewel; it means leveraging it.
