Why Bitcoin-Backed Loans Make Sense

If you hold Bitcoin, you have likely faced a frustrating choice: sell to access liquidity and trigger a large tax bill, or hold and watch opportunities pass by. There is a better option. Bitcoin-backed loans let you unlock the value of your holdings without selling, without tax events, and without giving up your long-term exposure.

The tax problem

Every Bitcoin you sell is a taxable event. In the UK, capital gains tax can reach 20% on gains above the annual allowance. For a $250,000 sale where you bought at $50,000, that could mean around $40,000 in tax. You also permanently exit a position you may believe in for the long term. Selling is often the most expensive way to access liquidity.

The liquidity problem

Traditional banks do not accept Bitcoin as collateral. They want income verification, credit checks, and months of paperwork. Even then, approval is not guaranteed. Meanwhile, life happens. You may need funds for a property purchase, business investment, or unexpected expense. Holding Bitcoin should not mean being locked out of using its value when you need it.

How Bitcoin-backed loans work

You deposit Bitcoin as collateral into segregated custody. You receive a loan in USD or GBP, sent directly to your bank account. Your Bitcoin stays in a dedicated address, never lent out or used as leverage. When you repay the principal plus interest, your Bitcoin is returned in full. No sale, no tax event, no exit from your position.

The key terms are simple: 50% loan-to-value means every dollar you borrow is backed by $2 of Bitcoin. That buffer protects you from normal volatility. If Bitcoin drops 30%, you are still well within margin. You get notifications before any action is required, and you can top up collateral or repay early at any time.

Why 9% and why Reserve

The effective rate at Reserve is 9% per year. That includes a 7.5% interest rate and a 1.5% origination fee. No hidden fees, no variable rates, no compounding. What you see is what you pay.

We chose 9% because it is sustainable. We could offer higher loan-to-value ratios and charge more. We could chase yield like the lenders that collapsed in 2022. Instead, we built for decades. Our 50% LTV, segregated custody, and no rehypothecation policy exist because we intend to be here in 2035, 2045, and beyond.

The bottom line

Bitcoin-backed loans are not for everyone. They work best for holders who want liquidity without selling, who understand the collateral mechanics, and who prefer a simple, transparent structure. If that describes you, a loan may make more sense than a sale. Get a quote, see the numbers, and decide for yourself.