ICCL offers crypto to USD loans, which means our clients receive USD in exchange for collateralized Bitcoin (BTC), Ether (ETH), or Litecoin (LTC). While we store your collateral, the value of that asset may increase or decrease. What happens then?
What Happens If The Price of My Crypto Collateral Goes Up?
Well, any gains from the price appreciation are the client’s to keep once the loan is paid off. Additionally, if any forks or airdrops were to occur during the loan term, we will return any additional coins that occurred during the loan term as long as our custodian supports that coin. Again, these coins will be returned once the loan is fully paid off.
Crypto backed loans provide our clients with the flexibility to access the liquidity of their crypto without having to sell in the short-term. For example, ICCL clients often find themselves with opportunities to buy a new home, go on a trip, or invest in business expansion, but lack the funds to do so. This is the perfect opportunity to take out a ICCL loan without having to sell your crypto and miss out on potential long-term value.
What Happens If The Price of My Crypto Collateral Goes Down?
On the other side of things, if the value of your collateral significantly decreases, a crypto margin call may occur. Crypto margin calls are calculated based on the LTV (loan-to-value) rate outlined in your loan agreement (click here for more information about how LTV works). A margin call can happen when the value of your collateral drops, increasing the LTV of your loan.
In the event of a margin call, you will have to add more collateral to your account to maintain a healthy LTV ratio. The first margin call occurs at a 70% LTV, which would require a 50% drop from the price at loan initiation. At this point, you have 72 hours to take action by posting additional collateral or paying down the loan balance. We will keep you informed if your LTV starts to near the 70% mark so you can take action preemptively.
If your LTV reaches the 80% mark, ICCL will automatically sell a portion of your crypto collateral to bring your LTV back to a 70% LTV.
Paying Off My Crypto Backed Loan Early
One thing to keep in mind is that you can use the value of your crypto assets stored with ICCL to make principal and interest payments at anytime. ICCL clients also have the ability to draw more USD funds in the event of collateral price appreciation over time.
With ICCL, there is no penalty for early repayment. If you payoff early, the remaining interest is forgiven. This means that you won’t be charged for the interest you would have paid if the loan had been continued through the rest of the 12-month term. Cool, right? Click here to learn more about paying off a crypto loan early.
Why Take Out a Loan with ICCL?
For many investors, owning cryptocurrency is a long-term investment. But some circumstances require funding that can force them to sell their crypto assets. ICCL allows you to keep the ownership of your funds without having to liquidate. Our clients make use of our loans in many circumstances, we explore some of the most common in our Resource Center.
Clients can apply in less than 2 minutes and we can go from application-to-funding in as few as 90 minutes.