Can you use crypto as collateral in Australia?

The short version

Rather than selling your Bitcoin, Ethereum or other holdings to access cash, you can pledge them as collateral and borrow against their value instead — keeping your position while unlocking liquidity. It's a regulated form of consumer credit in Australia, and Nexo is one of the providers offering it.

How it actually works

You pledge crypto you already own as collateral, and a lender issues you a loan against it — usually as stablecoins or AUD, sized to a percentage of your collateral's value (the loan-to-value ratio, or LTV). You keep exposure to your original holdings; the lender doesn't sell anything unless your collateral's value drops too far relative to what you've borrowed. 

On Nexo's Smart Credit Line, that LTV can go as high as 50% for BTC and ETH, or 30% for a wider range of other supported assets. The Standard Credit Line runs a bit lower, at 40% and 20% respectively.

A worked example on Nexo

Say you're holding A$20,000 worth of BTC and want to access some cash without selling it. 

On Nexo's Smart Credit Line, at a 50% LTV allowance for BTC, that collateral could unlock up to A$10,000. The amount is paid out as stablecoins or AUD, at a rate between 7.9% and 16.9% p.a. depending on your Wealth Club tier and how much of your available LTV you actually use. 

Your A$20,000 in BTC stays pledged with Nexo for the life of the loan; if its value holds or rises, you still benefit from that when you repay and the collateral is released back to you.

Important: This example is illustrative only — actual rates, available credit and LTV depend on your Wealth Club tier, the assets you pledge, and market conditions at the time, and aren't guaranteed.

Which cryptocurrencies actually qualify

Not every asset qualifies, and not every asset qualifies equally. Lenders typically favour the most liquid, established cryptocurrencies — BTC and ETH get the highest LTV allowances because they're easiest to value and to sell quickly if needed. 

Smaller or more volatile assets are usually accepted too, but at a more conservative LTV, precisely because a sudden price swing is harder to manage.

On Nexo's Smart Credit Line, that plays out as 12 eligible assets: Bitcoin (BTC) and Ethereum (ETH) at up to 50% LTV, and XRP, Solana (SOL), BNB, Cardano (ADA), Chainlink (LINK), Dogecoin (DOGE), TRON (TRX), SUI, Ethena (ENA) and PEPE at up to 30% LTV. 

Standard Credit Line covers a slightly smaller list of 10 assets, at 40% and 20% LTV respectively.

Why pledge collateral instead of just selling

Selling crypto to raise cash means giving up your position — if the market moves up afterward, you miss it. Borrowing against it as collateral is different: you're not disposing of the asset, just using it to secure a loan, so you keep your exposure intact while accessing funds for whatever you need them for.

Who actually holds your crypto while it's pledged

Your collateral doesn't just sit in your own wallet once it's pledged — it moves to the lender's custody for the life of the loan, which is exactly why custody security matters as much as the loan terms themselves. 

Nexo, for instance, uses Ledger and Fireblocks for custody, both externally audited providers. It's worth checking who actually holds the crypto, and how it's secured, before choosing where to pledge it.

What happens if the market drops

Collateral-backed lending doesn't remove market risk. Instead, it just restructures it. If your crypto's value falls enough that your LTV creeps too high, you'll typically get a window to add more collateral or repay part of the loan before anything is sold. 

Exactly how much room you get, and what triggers a sale, varies by provider and by loan type, so it's worth understanding the specific thresholds before you borrow, not after.

Frequently asked questions

1. Do I still own my crypto once it's pledged as collateral? 

Yes, in the sense that it's still yours and you still benefit if its price rises — but it's held by the lender for the duration of the loan, not in your personal wallet, and it can be sold without your separate consent if your loan-to-value ratio breaches the agreed threshold.

2. Can I use more than one type of crypto as collateral at once? 

On Nexo, yes — you're not limited to a single asset. Your available credit is based on the combined value of everything you've pledged, weighted by each asset's individual LTV allowance.

3. What happens to my collateral once I repay the loan? 

Once your balance is repaid, your pledged crypto is released back to you in full — you haven't sold anything, so there's nothing to buy back.

4. Is pledging crypto as collateral the same as staking it? 

No. Staking generally involves locking crypto to support a network and earn rewards; pledging it as collateral is about securing a loan. They're different mechanisms with different risks, and crypto used as loan collateral typically isn't simultaneously earning staking rewards.

5. Does the type of crypto I pledge affect how much I can borrow? 

Yes — collateral isn't valued equally across assets. More established, liquid assets like BTC and ETH typically unlock a higher loan-to-value ratio than smaller or more volatile ones.

Any information provided is general only and does not take into account your objectives, financial situation or needs. Consider whether a product is appropriate for you before acting. Credit Lines are available only to eligible clients and are subject to applicable terms, conditions, and jurisdictional restrictions.

Rates, fees, supported assets, and other product features may vary over time. Borrowing against digital assets involves substantial risk, and you may lose some or all of your digital assets if the value of your collateral falls or market conditions change. Before using this product, read the applicable Terms of Service and, where relevant, the Credit Guide and Target Market Determination available on the Nexo Australia website.

Nexo Australia Pty Ltd (ACN 667 513 073) is registered with AUSTRAC as a Virtual Asset Service Provider (Reg. No. DCE100843695-001). AUSTRAC registration is for AML/CTF purposes only and is not an endorsement.

Credit products regulated by the National Credit Code are provided by Nexo Individual Loans Pty Ltd (ACN 695 724 737), serviced by Avgi Pty Ltd (ACN 682 656 202) under Australian Credit Licence 567308, and managed by Nexo Australia Pty Ltd (ACN 667 513 073) under Credit Representative Number 580430. Credit products not regulated by the National Credit Code are provided by Nexo Loans Pty Ltd (ACN 695 724 442) and managed by Nexo Australia Pty Ltd. Credit criteria, terms and conditions, and fees and charges apply to all credit products.