How Can I Get a Crypto Loan in 2026? A Step-by-Step Guide

A crypto loan is a process of obtaining fiat currency by using crypto as collateral. It’s an easy way to get cash from crypto without selling the coins. So, the asset’s liquidity doesn’t change, Also, borrowing against crypto can help avoid a taxable event and assist with capital gains tax management.

It’s not a traditional loan. Funds are not issued without the pledge of cryptocurrencies as collateral. As a result, crypto-backed loans are generally viewed as a non-taxable financial instrument for converting digital assets into real cash without disposing of them.

What Is a Crypto Loan?

A crypto loan is the process of receiving cash or stablecoins secured by digital assets. The loan amount is issued based on the current market value of the user’s cryptocurrency. The sum you can borrow depends on the loan-to-value (LTV) ratio.

Once the borrower repays the principal and accrued interest, the pledged cryptocurrency is returned in full. This mechanism is comparable to pawnshop lending, where funds are provided only against tangible collateral rather than unsecured credit.

Key Features of Crypto Loans

• The max sum bases on the LTV ratio.
• Interest rates depend on the types of crypto used as collateral.
• Crypto serves as the underlying collateral.

These features help protect both lending and borrowing parties from potential market volatility and sharp price fluctuations of individual assets.

Why Do People Use Crypto Loans?

At first glance, it may seem illogical to take out a loan secured by cryptocurrency when the user already owns crypto and could simply sell it. Still, some aspects of using crypto loan platforms are reasonable.

1. Hold and Benefit from Potential Price Growth

Here is a simple example.

Lets’ say, a person owns 1 BTC. As of January 2026, its average value is $100,000.

Situation:

Suddenly, an urgent expense arises (it can be dental treatment, surgery, home repairs or anything else).

$20,000 is needed. If the user sells part of their holdings, they would cash out 0.2 BTC and be left with 0.8 BTC.

Now, imagine that BTC is expected to rise to $150,000. In this case, selling 0.2 BTC can be viewed as a loss of potential profit from the asset’s price increase.

Plan B

Obtain $20,000 as a loan amount without selling BTC, by using it as collateral. The borrower repays the loan receives the full BTC back. As the price increases, the user loses nothing, and even can to earn.

2. Capital Gains Tax Optimisation

Selling cryptocurrency is a taxable event in most European countries, as well as in the United States and Canada.

Example:

A user buys BTC for $10,000 and later sells it for $100,000.

The net profit is $90,000.

This constitutes a taxable event, and the profit is subject to capital gains tax.

On average, it is around 20%.

A loan is not a taxable event, so you can avoid paying about 20% in taxes. Instead, you just pay the interest rate. In some cases, this sum is offset by the appreciation of the underlying crypto asset.

3. Leverage for Investments

Crypto loans can also serve as an investment tool. For instance, a user holds several cryptocurrencies and identifies strong growth potential in one of them. They can obtain a loan with acceptable LTV ratios by using a less promising asset as collateral.

The borrowed cash is then used to purchase assets with higher upside potential. Once those assets generate profit, the user repays the loan using the proceeds.

4. Fast Access to Liquidity Without Losing Value

The crypto market is highly volatile, yet situations often arise in which cash is urgently needed. Selling crypto during a market dip is rarely a good idea. Taking out a loan secured by the same asset allows users to cover immediate financial needs. Meanwhile, there is no need to sell the coins at an unfavourable price. That’s why the process occurs without losing exposure to an asset that may recover and grow in value over time.

247bitcoinloan.com offers competitive crypto loan terms across all scenarios described above. Access fiat currency when you need it, and continue growing your crypto portfolio the rest of the time.

Choosing the Right Crypto Lending Platform

There are 2 crypto loan platforms types: centralized or decentralized. The key difference lies in how collateral is stored, how loans are issued, under what terms, and, most importantly, how each system approaches privacy and user control.

Features of Centralized Platforms (CeFi)

Centralized finance (CeFi) platforms operate much like traditional banks in the digital environment.

Their typical features:

• User-friendly interfaces;
• Higher LTV ratios for VIP clients;
• Insurance;
• Transparent lending terms;
• Dedicated 24/7 customer support;
• Clearly defined repayment conditions;
• A good fit for small to mid-sized loans;
• Mandatory KYC/AML verification.

If these features align with your needs, choosing a trusted crypto lending platform is essential. Get your crypto loan today with 247bitcoinloan.com, which offers these advantages and many more.

Features of Decentralized Finance (DeFi)

From a technical perspective, lending on DeFi platforms is executed through smart contracts. No intermediaries, approvals, or credit history checks are required. Any crypto holder can obtain a loan by providing cryptocurrency as collateral.

Moreover, the entire process on DeFi platforms is anonymous and confidential, as users are not required to disclose personal information.

Which Platform Is Better for a Crypto Loan: CeFi or DeFi? 

The answer depends on the criteria that matter most to you when taking out a loan.

Criteria	DeFi	CeFi
Anonymity	High. The crypto holder remains anonymous.	Users must complete identity verification.
Liquidation Policy	Assets are liquidated automatically as soon as their value falls below the required LTV.	Platforms usually offer alternatives, such as early repayment, adding collateral, reducing the loan principal, or other risk-management tools.
Control Over Assets	Assets are locked via a smart contract in the user’s wallet.	Assets are transferred to a dedicated, secure custody vault.
Customer Support	Limited. Support cannot assist in cases of smart contract errors or user mistakes.	Available 24/7. Technical issues are often resolved with the help of platform specialists.
Complexity	Requires strong technical knowledge of crypto operations. Full responsibility lies with the user.	A transparent and simplified lending system with easy asset transfer and repayment.

Step-by-Step: From Wallet to Cash

The process of getting the loan divides in several stages.

Stage 1. Finding the Best Platform

Start by reviewing each platform’s offerings. Carefully examine their terms. Choose one with the best terms, which fully meet your needs. While choosing, ensure that the platform can technically accept the crypto type you own.

Stage 2. Understanding LTV and the Loan Amount

Compare how much cash you can receive on different platforms when using the same amount of crypto as collateral. For example, an LTV of 50% on BTC means that by depositing 1 BTC, you can receive a loan equal to 50% of its current market value. If 1 BTC costs at $100,000, the maximum loan amount would be $50,000.

Stage 3. Loan Terms

Explore the interest rate. Compare it with the sum you’ll get when the asset price grows. Consider whether the loan is really cost-effective.

The interest rate depends on:

• Sum you borrow
• Platform terms
• The LTV ratio
• The liquidity of the collateral asset

Stage 4. Execution via Smart Contracts or Platform Transfers

Transfer the collateral to a secure custody solution and get the best crypto loan. This process is typically instant. It executes either through smart contracts or via internal platform transfers.

CeFi stores crypto in secure custody vaults. In DeFi systems, assets are locked directly by a smart contract.

Risk Management

• Learn the loan terms carefully before proceeding, paying particular attention to LTV requirements.
• The higher the LTV, the more funds the user receives upfront.
• If the collateral’s value declines and the LTV no longer adequately covers the loan, the system may liquidate the assets.
• The user can avoid the assets’ liquidation by providing additional collateral or repaying the loan early.

Advantages and Disadvantages

Using a crypto lending platform is often viewed as an effective financial management tool. However, it is important to have an objective perspective and understand whether it is truly beneficial in your specific situation.

Pros

• The asset remains exposed to the market while the user receives cash.
• It helps avoid capital gains tax. 
• Fast access to liquidity is possible.
• Early repayment is usually available without penalties.
• Provides greater financial flexibility.
• Suitable for both small loans and large borrowing amounts.

Cons

• Market volatility and the risk of liquidation if the LTV threshold is exceeded.
• Interest payments may exceed the asset’s price appreciation during the loan period.

Why Borrowing is a Better Long-Term Play

Compared to selling an asset, borrowing is often the more advantageous option. It allows users to access the cash equivalent of their cryptocurrency while keeping the asset in the market. Over the long term, the value of most major crypto assets tends to increase. 

When you sell your crypto, you:

• Trigger a taxable event;
• Lose potential upside from future price appreciation.

When you use crypto as collateral, you:

• Keep your crypto on the market, where it can continue to grow in value;
• Avoid paying capital gains tax, since a loan is not considered income.

This approach allows users to convert crypto into cash multiple times when needed and then repay the loan, all while retaining ownership of their assets.

Conclusion

A crypto-backed loan is a strong option if you view it as a smart way to invest and preserve assets, and if your goal is to maintain or increase crypto liquidity.

A crypto loan can:

• Help avoid immediate capital gains tax.
• Potentially offset borrowing costs through crypto price appreciation.
• Be an effective financial tool for investors.

If, in addition to these benefits, convenience, transparency, and 24/7 customer support are important to you, 247bitcoinloan.com offers one of the best crypto loan solutions. The platform is designed for long-term use, secure transactions, and is accessible even for beginners.

Contact 247bitcoinloan.com to get your crypto loan today with 247bitcoinloan.com.