Are Bitcoin loans a sign crypto has gone mainstream? | The Business | ABC News

Millions of Australians are reported to own at least one cryptocurrency. A few Australian firms are engaging in lending to retail or everyday mums and dads using crypto as collateral, and at least five big Australian financial companies do it too. Within any given lending arrangement, digital coins including Bitcoin and Ethereum are accepted as collateral for the loan. If the price of the cryptocurrency goes up during the term of the loan, the customer can borrow more money for a car or even a home deposit, for example. If it falls sharply, the borrower is asked to stump up more crypto or another asset as collateral. This type of lending kicked off in 2017, and ramped up during the pandemic. The loan to value ratio (LVR) differs between lenders. Independent economist, Saul Eslake, says the collapse of both small and large financial institutions, using cryptocurrencies as security, can present big risks to Australia's financial stability, especially if lending against cryptocurrencies became widespread.
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