Crypto assets have performed well in recent years, but when it comes to providing collateral to support lending, up until recently, at least, they have been pretty lacking.

Though a few traditional banks such as JPMorgan have experimented with letting clients use cryptocurrencies like Bitcoin and Ethereum as collateral, these privileges have only been extended to high-value institutional investors like hedge funds rather than high-street consumers.

This can put cash-poor but crypto-rich investors in a precarious position when it comes to obtaining credit. Among Millennials and Gen Z, it is becoming more and more common for their net worth to be held in digital assets rather than in a primary residence like a home, particularly with homeownership rates among young people at an all-time low in the U.S. Millennials and Gen Z are now just as likely to own crypto as they are to own a home.

NASDAQ-listed fintech Figure Technologies Solutions, Inc. became a prominent example of a company whose business hinged on a combination of TradFi and crypto when it first launched in 2019. Its main proposition was to allow regular investors, rather than just well-heeled banks, to have access to the high-quality yield generated by private credit such as consumer mortgages in the form of tokenized Home Equity Lines of Credit (HELOCs). These tokenized real world assets (RWAs) are recorded natively on the blockchain from inception.

Now, it is pivoting to providing crypto-backed loans*, processing the applications via its decentralized marketplace, Figure Markets, which launched back in September 2024 Figure’s service means users put up Bitcoin (BTC), Ethereum (ETH), or Solana (SOL) as collateral to access cash while continuing to stay invested in crypto. This means they can also get the benefit of the capital appreciation of their crypto, while potentially avoiding the capital gains tax that crypto is subject to in the U.S. at rates of up to 20%.

Image: Figure

Users can borrow up to 75% of the value of their crypto. Interest rates are tiered based on the size of the loan versus the collateral: rates start at 8.91% (9.999% APR)² for loans up to 50% LTV, and 11.50% (12.62% APR) for loans up to 75% LTV.

Users’ collateral are held in decentralized self-custody wallets, which employ multi-party computation (MPC) technology, in which private keys are split into “shards” across multiple parties so no single point is ever compromised.  Users' collateral will be kept separate from other borrowers, in a segregated wallet, which allows them to view their collateral onchain at any time. The crypto is released from MPC custody when the loan is paid off in full.

“The collateral won’t be used for ‘rehypothecation,’ which is where a consumer's collateral is reused or lent out,” a Figure spokesperson said. 

Figure users also have the option of purchasing Liquidation Protection. This enables users to effectively weather market volatility by avoiding margin calls or liquidations related to price movements.

“Rather than suddenly liquidating the collateral if there is a sudden drop in prices, liquidation protection* means borrowers get time to respond to market conditions rather than facing automatic liquidations related to price movement,” a Figure spokesperson said.

Borrowers can make monthly interest-only payments over the course of the loan term, or instead choose to defer interest until their term is up as long as their loan is in good standing. The remaining balance and any deferred interest are due in full at maturity. Once the loan is paid off, any excess collateral or fiat will be returned to the borrower.

Figure’s crypto-backed loan* is now available to residents of every state except Idaho, Illinois, Kentucky, Maryland, Mississippi, South Dakota, Texas, Vermont, Virginia, and the District of Columbia, but the company is working to expand to these locations.

Download the Figure Markets app and earn $50 when you deposit $500†.

*Crypto backed loans are provided by Figure Lending LLC dba Figure (NMLS 1717824), not available in the state of New York. Loans subject to approval. Crypto collateral may be liquidated. Terms apply - see full disclosures at figure.com/disclosures/

7. Liquidation protection is only available in CA, NY, FL, PA, AL, AK, GA, HI, MA, UT. Liquidations will still occur if the loan becomes delinquent. More information about liquidation protection can be found here. The Figure Crypto Backed Loan (CBL) allows eligible users to borrow U.S. dollars secured by crypto collateral. The maximum loan-to-value ("LTV") ratio is 50% at origination.

Past performance and yields are not reliable indicators of current and future results. Rates associated with the mentioned products are not guaranteed and subject to change.

Investing in cryptocurrencies involves significant risks. Cryptocurrency trading is not available in NY. Please click here for risk disclosures on investing and trading in cryptocurrencies.

Figure Payments Corporation offers to self-directed investors and traders cryptocurrency brokerage services under the brand name, "Figure Markets". It is neither licensed with the SEC or the CFTC nor is it a Member of NFA. Figure Payments Corporation's NMLS ID number is 2033432, and is located at 100 West Liberty Street, Suite 600, Reno, NV., 89501. You can verify Figure Payments licensing status at the NMLS Consumer Access website. Click here for Figure Payment's state license and regulatory disclosures.

**Rates for Democratized Prime are variable, not fixed or guaranteed, and may change based on pool composition, borrower performance, auction dynamics, and market conditions; learn more:. Figure Markets and its affiliates do not guarantee repayment, liquidity, or asset value, and participation is subject to applicable terms, including the Democratized Prime Terms of Service and HELOC+ Addendum.

Figure Payments Corporation, Figure Lending LLC, and Figure Markets, Inc. are each wholly owned subsidiaries of Figure Technology Solutions, Inc. Products and services of all of these entities are offered under the Figure Markets brand. NOTE FOR INVESTORS: When applying for accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Please click here for further important information explaining what this means.

† Offer valid for new Figure Markets users who join via an affiliate link, pass KYC, and deposit $500+ within 30 days of verification. Funds must remain in the account for 30 days post-deposit, and the account must remain in good standing for 60 days. Figure Markets reserves the right to verify identity, determine eligibility, or modify/revoke this offer at its sole discretion without notice. For more information visit https://www.figuremarkets.com/disclosures/figure-markets-welcome-bonus-program/

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