Can I loan cryptocurrency? Crypto lending refers to a type of Decentralized Finance that allows investors to lend their cryptocurrencies to different borrowers. This way, they will get interest payments in exchange, also called “crypto dividends”. Many platforms that specialize in lending crypto also accept stablecoins, on top of cryptos.
Are crypto loans safe? Crypto loans are only as safe as the lending platform you use. Thanks to a lack of government regulation and oversight, crypto lenders offer less protection against your collateral than a traditional bank or online lender. They typically use private insurance that only covers a specific kind of threat.
What happens if you don’t pay back a crypto loan? You may need to pledge more crypto if the coin’s cash value falls, and a lender can trigger automatic payments or liquidate your crypto account if you miss a payment. Despite the risks, a crypto loan can be a lifeline if you need money for purchases but don’t want to sell out of your crypto.
Do crypto loans count as income? Are crypto loans taxable? Loans have long been considered non-taxable by the IRS. It’s reasonable to assume that for the most part, cryptocurrency loans will be treated the same way.