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What is crypto lending? Borrowing and lending against crypto explained

By SendPay Business · · 2 min read

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Crypto lending covers two things: lending your crypto to earn interest, and borrowing money by putting crypto up as collateral. It can be done through companies or through DeFi apps, and both carry real risk.

How a crypto-backed loan works

  • The borrower locks up crypto as collateral, usually worth more than the loan.
  • The lender pays out cash or stablecoins.
  • If the collateral's value falls too far, the borrower must add more or it gets sold.
  • When the loan and interest are repaid, the collateral is released.
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Centralised vs DeFi lenders

Centralised lenders are companies that hold your crypto for you. DeFi lenders are smart contracts that run automatically. In 2022, several large centralised lenders, including Celsius and BlockFi, froze withdrawals and filed for bankruptcy, leaving customers unable to reach their funds.

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Key risks

Sharp price falls can wipe out collateral, the lender itself can fail, and smart contracts can be hacked. Crypto loans and deposits don't have the protection that bank deposits have.

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Where SendPay fits

SendPay doesn't offer lending or crypto loans. SendPay platforms let your customers buy, sell and hold crypto, held with regulated partners, alongside GBP, EUR and USD accounts and branded Visa cards.

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How it works

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  2. Choose what it does
  3. Launch when you are ready

Why sign up

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It's all about creating your own financial platform with ease. Start with a free account today.

  • A free business accountOpen it in about a minute with your business name, email, password and mobile. No card and no documents to start.
  • Get paid from day oneTake card payments, and share your own payment link and invoices so customers pay in a click.
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SendPay Business is a technology company, not a bank. Accounts, cards and payments are powered by licensed partners.

Questions people ask

What does a quoted rate really pay?

Convert a rate between APR and APY to see what compounding adds.

APR to APY calculator →
What is a margin call?

A demand to add funds when collateral falls in value.

What is a margin call? →
What is crypto custody?

Who holds the keys to your crypto.

Crypto custody →
What is a stablecoin?

A crypto token designed to hold a steady value.

What is a stablecoin? →

Read next

Spotted a mistake or something out of date? and we'll fix it. How our guides are made

This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.