Crypto loans are a useful option if you want to access funds without selling your cryptocurrency.
This guide will provide a rundown of the top crypto loan platforms in the UK right now, helping you compare rates, requirements, and features to make informed choices.
What Is a Crypto Loan?
A crypto loan allows you to borrow funds using your digital assets as collateral. Instead of traditional assets like property, your cryptocurrency—such as Bitcoin or Ethereum—acts as security. This means you don't need to sell your crypto to access cash, making it an appealing option for those who want to maintain their crypto holdings while unlocking liquidity.
Read more: What are Bitcoin Loans? And How Do They Work?
What Are the Best Crypto Loan Platforms in the UK?
Here’s a closer look at the top crypto loan platforms available in the UK for 2024.
The Bitcoin interest rates give you an idea of what to expect when borrowing against it on these platforms. Keep in mind that rates can fluctuate depending on market conditions.
Lower rates, while appealing, may also indicate higher risk or less security, so it's important to evaluate the platform's stability and reputation.
Ledn
Ledn is one of the best platforms for crypto loans in the UK. It offers competitive interest rates and secure loan structures, making it an ideal choice for borrowers who want reliability and transparency. Ledn’s unique B2X loans allow you to double your Bitcoin holdings while accessing liquidity. It has an unblemished track record of never pausing withdrawals and excellent customer support.
Bitcoin Loan Interest Rate: 12% APR.
Pro: Competitive rates with secure loan options, including B2X for doubling Bitcoin.
Con: Limited support for cryptocurrencies compared to other platforms.
Nexo
Nexo offers instant crypto loans with no credit checks, providing users with flexibility. The platform supports over 40 different digital assets and provides competitive rates, especially for larger loans.
Bitcoin Loan Interest Rate: From 0% APR, depending on the amount of Nexo tokens held.
Pro: Wide range of supported assets with no credit checks.
Con: Being centralised introduces platform risk.
YouHodler
YouHodler allows users to borrow against over 50 types of cryptocurrencies. The platform offers flexible repayment terms and boasts high loan-to-value (LTV) ratios, making it a popular choice for crypto enthusiasts.
Bitcoin Loan Interest Rate: From 12% APR.
Pro: High loan-to-value (LTV) ratio of up to 90%.
Con: History of a data breach.
Hodlnaut
While Hodlnaut primarily focuses on crypto savings accounts, it also provides crypto loans. It is known for competitive interest rates and a simple, intuitive user interface.
Bitcoin Loan Interest Rate: Approximately 6.2% APR.
Pro: Competitive rates with a straightforward user interface.
Con: Limited cryptocurrency support reduces flexibility.
Aave
Aave is a decentralised finance (DeFi) platform that offers crypto loans with features like flash loans for arbitrage, making it popular with experienced users. It’s accessible in the UK.
Bitcoin Loan Interest Rate: Variable, typically around 4% APR.
Pro: Trusted DeFi platform with flash loans for arbitrage opportunities.
Con: Requires active management to avoid liquidation.
Alchemix
Alchemix offers a unique type of loan where repayment happens automatically. Instead of a fixed interest rate (APR), your collateral is deposited into a yield-generating protocol, and the earnings from that collateral are used to gradually pay off your loan. This reliance on external yield strategies can carry risks if those protocols experience issues or failures.
Bitcoin Loan Interest Rate: Operates with a self-repaying model rather than traditional APR, as loans are paid off using yield generated from collateral.
Pro: Self-repaying loans with no liquidation risk.
Con: Limited to supported cryptocurrencies and reliance on external yield-generating protocols.
Compound
Compound is a decentralised platform that offers crypto loans without a minimum borrowing requirement, making it ideal for smaller borrowers. It’s available in the UK but can be complex for beginners.
Bitcoin Loan Interest Rate: Typically low, around 4%, but fluctuates based on market demand.
Pro: No minimum loan requirements with low APR.
Con: Complex for beginners.
The Key Differences Between Crypto Loans and Traditional Loans
Crypto loans differ from traditional loans in several key ways:
Collateral
Traditional loans often require assets like property or savings. In crypto loans, digital assets serve as collateral.
Credit Checks
Many crypto loan platforms do not require credit checks, unlike traditional lenders.
Speed
Crypto loans can be approved much faster than conventional loans, often within hours.
Interest
Rates tend to vary significantly between crypto platforms, which isn't always the case with traditional banks.
Read more: Crypto Loans vs Traditional Loans
Crypto Loan Interest Rates in the UK
Interest rates for crypto loans in the UK differ widely between platforms.
Some offer lower rates for large collateral amounts, while others may charge higher rates for smaller or riskier loans.
Compare platforms before committing to ensure you get the best deal for your specific needs. Some platforms offer rates as low as 4.5%, while others might exceed 12% depending on the coin used, loan term, and platform’s risk model.
Always read the terms and conditions carefully before selecting a platform.
Ask The Expert
4 Tips for Selecting a Crypto Loan Platform, From Mauricio Di Bartolomeo, Ledn Co-founder and CSO
There are a few things you should keep in mind when choosing a crypto loan platform in the regulated UK market.
1. Activity in the 2022 Collapse
One of the first questions you should ask is whether the platform was operational during the 2022 crypto market collapse (FTX, Alameda). If they weathered that storm without issues, they’ve proven their resilience. A platform with no history of problems during that time earns extra trust points, while those that struggled should be avoided.
2. Proof of Reserves
Always check if the platform provides Proof of Reserves. This ensures that they have enough assets to cover all customer deposits, a must-have feature in today’s market. Transparency in this area helps ensure that your collateral won’t be misused.
3. Avoid Platforms with Tokens
Be cautious of platforms that issue their own tokens. While some token-based platforms offer attractive terms, they can introduce additional risk. Stick with platforms that don’t complicate things with token-related risks, ensuring your collateral remains secure.
4. FCA Registration and Licensing
Make sure the platform is registered with the Financial Conduct Authority (FCA). Platforms without FCA oversight can expose you to regulatory or security risks, making FCA-compliant platforms the safer bet.
For more tips from Mauricio, follow him on Twitter.
The Risks of Crypto Loans
Like any financial product, crypto loans come with risks.
The value of your collateral (your cryptocurrency) can fluctuate significantly, potentially resulting in a margin call if the value drops below a certain threshold. If you cannot meet the margin call, you risk losing your assets.
Additionally, while some platforms don’t require credit checks, they might demand high collateral ratios, limiting the loan amount you can access relative to your assets.
Read more: How To Store Bitcoin Everything You Need To Know
Alternatives to Crypto Loans
Crypto loans aren’t for everyone. If you prefer a more traditional approach, conventional loans might offer lower rates and more predictable repayment terms.
However, if you want to avoid selling your cryptocurrency, Ledn’s B2X loans provide an alternative. B2X loans allow you to borrow more Bitcoin without needing to sell your existing holdings.
Read more: How to Earn Interest on Bitcoin - Actionable Guide
Qualifying for a Crypto Loan in the UK
Different platforms have varied requirements. Typically, you'll need to meet specific credit and collateral criteria.
Credit Check Requirements
Some platforms do not require credit checks, making them ideal for those with less-than-perfect credit. Others might run a soft credit check to assess your financial standing, but this is usually not as stringent as with traditional loans.
Digital Asset Qualifications
The type of digital asset you hold will impact your loan qualification. Platforms often prefer high-cap cryptocurrencies like Bitcoin or Ethereum, which are seen as more stable. However, some platforms accept a wider variety of altcoins.
Current Financial Standing and Repayment Terms
Your financial health can influence the terms you are offered. Some platforms may require you to provide additional collateral if you have a riskier financial profile. As with traditional loans, it’s crucial to evaluate whether you can meet the repayment terms before committing.
Is a Crypto Loan Right for You?
A crypto loan could be ideal if you need liquidity and are confident in the long-term value of your crypto holdings. However, if your finances are unstable or if you’re unsure about market volatility, you may want to explore more traditional options.
Conclusion
Crypto loans are a flexible way to access funds without selling your crypto. By choosing the right platform you can make the most of your holdings and manage your financial needs effectively.
Disclaimer
This article is sponsored by 21 Technologies Inc. and/or its subsidiaries (“Ledn”) and is for general information, discussion, or educational purposes only and is not to be construed or relied upon as constituting legal, financial, investment, accounting, tax, estate-planning, or other professional advice or recommendation. Please read Ledn’s full Risk Disclosure Statement and Disclaimers.
