An asset is something that can be used as a collateral to borrow money. The same is now possible with XRP which can get its holder a fiat loan of up to USD 2 million. This service is offered by a company claiming to be the world’s first instant cryptocurrency-backed loan service known as Nexo.
Nexo- a platform for Cryptocurrency-backed loans
Nexo is a platform that aims to deliver the world’s first instant cryptocurrency-backed loans. The decision to enter the market is related to the fact that there were no alternatives for cryptocurrency owners to enjoy their wealth without having to sell their coins. Users will always have 100% ownership on their assets and have immediate access to cash in case it is requested. There are no hidden fees and the process can be completed in just a few simple steps.
The platform is backed by prominent players in the space such as Michael Arrington and is powered by Credissimo, a leading European FinTech group providing financial services to millions across the continent. The service will effectively allow users to deposit their cryptocurrencies and digital assets to Nexo wallet and instantly allow a loan with no credit checks. This allows users to own 100% of their digital assets while having cash on demand.
No official announcement has been made by Nexo as of now. However, their platform shows that the asset can be utilized as collateral along with Bitcoin [BTC], Ethereum [ETH], Binance Coin [BNB], and the service’s native asset, Nexo Coin. The withdrawals and deposits are currently disabled.
The platform allows users to utilize XRP for a flexible credit line and 8% per year charges. Moreover, the service utilizes BitGo, a custody provider approved by the United States Securities and Exchanges Commission. The existence of Nexo provides a solution to tax problems, which is a prominent hurdle for cryptocurrency enthusiasts as well.
Currently, they are forced to pay capital tax on their gains when they cash out. However, the platform will allow users to utilize a method known as the “Zuckerberg Tax”, removing tax liabilities by converting selling into an overdraft, where users still have access to liquidity.
This platform comes as a strong competitor to SALT which also provides a Cryptocurrency-backed loan in and its services are available in 35 states of United States, including Washington D.C. SALT coin is currently ranked 112 by market cap according to Coinmarketcap.com data depicting a clear demand for crypto backed loan.
The service of crypto backed loans is slowly picking up as people do not want to lose their holdings as they believe the cryptocurrencies prices will rise and they don’t want to be FOMO ed.
Will we soon find traditional banks giving out services of crypto backed loans? Do let us know your views on the same.