A Melbourne-based company is now offering crypto-backed loans. Helio operates under an Australian Credit License (ACL) issued by the Australian Securities and Investments Commission (ASIC).
How does it work?
Helio Lending accepts four major cryptocurrencies as collateral for their loans.
The platform currently supports Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Ripple (XRP).
It offers loans for up to 48 months and with an APR of between 17 and 24 percent, depending on the value of the collateral.
Customers can choose between 30, 40 and 50 percent loan-to-value (LTV) ratio. For example, a 10,000 Australian-dollar loan with a 30 percent LTV would require the borrower to pledge 7.19 BTC as collateral. In this case, the APR would be 17 percent and the monthly payment 350 Australian dollars.
For those who want an approximate calculation of the loan value, you can check out their free calculator on their site.
Helio’s founder, John O’Shea, believes that there’s a mass market for crypto-backed loans and these loans can be taken advantage of especially in the bear market.
O’Shea stated there are currently not enough service providers and companies willing or able to support the growing market and to loan against crypto assets.
That is why he believes this is a huge market.
One of the biggest questions that most banks and other loan companies have in mind, is what happens if the person can’t repay the loan? Helio believes that if that happens, the company can sell the coins to cover the losses.
It’s important to note that Helio Lending is regulated in Australia. Helio Lending has obtained its credit license by acquiring another company that held one, Cashflow Investment.
This is a great way for people who hold a decent amount of cryptocurrencies and at the same time worried about the bear market situation. With this, cryptocurrency holders can borrow fiat money and keep their digital coins for better times.