2020 so far has been a transformational year for all of us. It changed how we live, work, and communicate. We still vividly remember the feeling of cold sweat running down the neck as Bitcoin tumbled below $4,000 before our eyes in March. The first cryptocurrency recovered more than three-fold since then. As much as it’s been a year of challenges, 2020 is also a year of opportunities.
The opportunities in the cryptocurrency industry emerge not only in the form of Bitcoin price appreciation. DeFi has stolen a spotlight (and headlines), as a whole cluster of projects with whooping valuations quickly came to existence. Derivatives allowing people to benefit from the cryptocurrency going up and down provided a steady inflow of funds into trading activities. Entrepreneurs, identifying an influx of interest in cryptocurrencies, have formed a diverse range of services, from education, to marketing, to OTC.
If we had to guess, more people than ever derive a significant portion of income in cryptocurrencies and own a meaningful crypto-portfolio. That does not change the fact that we still live in a fiat-based economy. In other words, groceries, rent, a new computer, your employees’ salaries need to be covered in dollars (euro, ruble, or whatever other national currency you use).
For crypto-earners, living in the fiat-based world means one thing: having to sell crypto to cover expenses. No longer. Enter CEX.IO Loans.
Introducing CEX.IO Loans
With CEX.IO Loans, you can instantly borrow USD or EUR against your cryptocurrency assets. The loans range in size from $500 to $500,000 and in duration from a week to a year. Loans bigger in size and longer in duration have smaller interest rates. So you can choose the optimal terms that suit your needs.
Using your digital assets as collateral to borrow against, instead of selling, can be a practical alternative. Selling Bitcoin to cover expenses means giving up a potential upside, especially when the exchange rate is not the best. Borrowing against this Bitcoin gives you extra funds you need, while you can still enjoy the price appreciation after.
For traders and investors, such a liquidity injection in the form of a crypto-backed loan can fuel uninterrupted market activity. For startups and sole entrepreneurs, a loan can cover operational and growth expenses.
How it Works
Borrowers can get up to 50% of their collateral value as a loan in minutes. That means, you pledge a digital asset as collateral, and you can get 50% of its value as a fiat loan. The loans are overcollateralized to limit the risk for both the borrower (you) and the lender (the platform).
Providing you have sufficient collateral for the loan you need, we issue the funds. No credit or employment checks required. While your collateral is locked to guarantee your loan, you can keep the fiat funds in your CEX.IO account or withdraw them to your bank account or to your card. From there, you spend the money however you planned.
As the term of your loan finishes, you can choose to extend or to repay. When you repay the loan interest and the principal, your collateral releases back to you fully.
Benefits of CEX.IO Crypto-backed Loans
Compared to traditional bank loans, CEX.IO crypto-backed loans are simple, fast, and flexible.
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Get up to $500,000 in cash instantly
Applying for a traditional bank loan is a complex and lengthy process. Your bank will evaluate your prior credit history, your income, business revenues, and assets.
The whole process can take weeks or even months.
With the crypto-backed loans, these procedural steps are eliminated. What matters is that you have the sufficient amount of collateral to borrow against. That’s it. You can get cash to your CEX.IO balance in a matter of minutes.
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No credit check required. No credit scores
A credit score is a central part of your evaluation in a traditional bank process. We become dependent on a number, the calculation of which is often designed to get us more in debt. No prior credit, no debt means a bad credit score. That, in turn, means no loan.
It’s different with crypto-backed loans. You don’t need to think of your previous credit history. There is only one simple requirement — you have cryptocurrency on your account to use as collateral. In the worst case, if you can’t repay the loan, the creditor sells the cryptocurrency that backs it, clearing your liability.
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Use crypto-assets as collateral
With traditional loans, the collateral assets (real estate and other property) are usually illiquid. That means, the collateral value is mostly fixed for the duration of the loan. You can only reassess the collateral if the property significantly gains in value, which can happen a few times only.
In crypto-backed loans, the real time value of your crypto collateral is always available. When the cryptocurrency grows, you can increase the size of the loan by securing additional funding. Alternatively, you can pay off the loan. The choice is yours.
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Quick and transparent evaluation of cryptocurrency collateral
When taking a loan from a bank, you undergo the evaluation of an asset that you pledge as collateral. The collateral value of the house, for example, is typically determined by an appraiser who specializes in real estate. Getting an appraiser requires time and financial expense. While a lender may sometimes cover an appraiser’s fee, time involved lands on the borrower’s shoulders as extra cost.
With the loans backed by crypto, the collateral value is available in real time. Hence, assessment doesn’t require bringing in any third party, paying a commission or waiting to determine the collateral’s worth.
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Borrowers can benefit from the collateral growth
When you borrow funds against cryptocurrency, the value of the collateral continues to fluctuate for the duration of the entire loan.
The growth potential of your cryptocurrency allows you to earn from the increase in collateral’s value. That means, by the end of the term, you may potentially have the collateral value increasing by an amount larger than the interest you need to pay for using the loan. In this way, the collateral appreciation can offset the interest rate expense.
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Repay the loan with a part of the collateral if needed
In traditional finance, repaying a loan with your collateral can be difficult as, most of the time, it cannot be subdivided (unless your collateral is stocks).
For crypto-backed loans, your collateral is perfectly divisible to cover your loan. Moreso, when the cryptocurrency price plunges and your collateral value can no longer support your loan, you can add more collateral to keep using the loan. Alternatively, if you cannot up your collateral fast, it is automatically sold and used to repay the loan. Such automatic liquidation ensures that you can fulfill your obligations before the lender and caps the risks of both sides.
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Extend the loan term any time, with no penalties
Extending a loan with a bank implies extra time and cost. You need to fill in an application and provide some supporting documents. Then wait for an approval. If success, there might be some processing fees or penalties that also apply.
With CEX.IO Loans, you can extend the loan at any time you wish, without undergoing any application process or paying extra fees.
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Collateral is secured at CEX.IO cold storage
CEX.IO stores your cryptocurrencies in cold storage to ensure your funds are secure. With CEX.IO your cryptocurrency is safe, while you are benefiting from the funds borrowed against it at the same time.
The new service will be available in 217 countries, including the UK, the EU, the majority of Asian countries, Australia, and many others.
CEX.IO Loan: focus on opportunities
Recognizing the hardships that 2020 has created for many, we choose to focus on opportunities. And it takes drive and capital to rebuild what’s been damaged, to maintain what we care for, and to create what never existed.
Launching the Loans service, we want to offer the capital to those with ambition to identify and capture the opportunities in the market. We aspire these Loans to be that lifeline, the boost, or the break that entrepreneurs need chasing their dreams, while they still can benefit from the potential appreciation of assets they own.
What’s next? Where do I get a loan?
We are putting the final touches and wrapping up the final tests before we unveil the site. As the service goes live, we’ll update this post. And you surely won’t miss the virtual fireworks we’ll be putting out in all our social media channels. We are ready to launch. See you at the liftoff.
Update — October 30, 2020
CEX.IO Loan is live! 🚀
We’re beyond excited to announce that CEX.IO Loan has received the Gibraltar Financial Services Commission (GFSC) license (license no. А159904). Now CEX.IO Loan is officially launched and can provide lending services to customers from all the eligible countries.
We invite you to benefit from the simple, fast, and flexible CEX.IO crypto-backed loans today!
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