How to Compare Crypto Lenders: A Borrower's Checklist

In brief

• The headline rate is the easiest number to compare and the least useful. What decides a bad month is who holds your collateral, whether it can be re-used, what happens if the lender fails, and the three LTV thresholds for your asset.
• Below are ten questions to put to any lender, with what a good answer sounds like and what should end the conversation.
• Where Arvexo has published its own answer, it is quoted with a link, so you can hold us to the same standard as everyone else.

Comparing crypto lenders on headline rate is like choosing an airline on legroom. It is the easiest number to find, it is real, and it is not what determines whether the trip goes badly.

The questions that matter are about what happens when the market moves against you and what happens if the lender gets into trouble. Both are answered in documents most borrowers never open.

1. Where is my collateral held, and by whom?

Ask: Who holds the collateral, is it a third-party custodian or the lender itself, and is the arrangement named?

Good answer: A named custodian, or a clearly described in-house arrangement with named controls. Specifics you can verify.

Bad answer: "Secured with institutional-grade infrastructure" and nothing further. That sentence contains no information.

Arvexo's answer: collateral is held through Ledger and Cobo Custody, in segregated wallets dedicated to your loan, and you can see the on-chain balance of your collateral wallet from your loan page at any time. The detail is on the security page and in how collateral is stored and protected.

2. Is my collateral segregated, and can it be lent out?

This is the question that separated people who got their crypto back in 2022 from people who did not.

Ask: Is my collateral held separately from the company's own assets and other customers'? Can it be lent, staked, rehypothecated or otherwise used while my loan is open?

Good answer: Yes to segregation, no to re-use, and it is written into the agreement rather than said in an email.

The SEC has warned that in crypto interest-bearing accounts, assets "may be used to invest in various crypto asset-related products, schemes or other activities, including lending programs" (SEC Investor Bulletin, 14 February 2022). That bulletin is about lending your crypto out rather than borrowing against it, but the mechanism is identical: once someone else can use your coins, you are exposed to what they do with them.

Arvexo's answer: collateral "is never lent out, rehypothecated or used for any purpose other than securing your loan", and every outbound transfer needs multi-party approval (how collateral is stored and protected). How crypto collateral custody works explains what segregation and rehypothecation mean in practice.

3. If the lender fails, whose collateral is it?

Ask: In an insolvency, am I an owner of my collateral or a creditor of the company?

This is not hypothetical. In January 2023 the US Bankruptcy Court for the Southern District of New York held in the Celsius bankruptcy that "the cryptocurrency assets deposited in Earn Accounts are presumptively property of the estate", rather than of the account holders (In re Celsius Network LLC). The terms of use decided it.

In separate matters, the FTC stated that Voyager customers "were locked out of their cash accounts for more than a month and lost more than $1 billion in crypto assets" (FTC, October 2023), and the SEC recorded that Genesis "announced that it would not allow its Gemini Earn investors to withdraw their crypto assets" in November 2022 (SEC, January 2023).

Good answer: A clear clause naming who holds title to the collateral during the loan, which you can read before signing. Ask every lender for it, including us.

4. What are the exact LTV thresholds for my asset?

Ask: What is the maximum starting LTV, the margin-call level and the liquidation level, for the specific asset I am posting?

Three numbers, per asset. A lender that will not give you all three in writing is asking you to accept a risk they will not quantify. Margin calls and liquidation sets out what each threshold means.

Bad answer: A single "up to" figure with no margin-call or liquidation level attached.

Arvexo's answer: the three thresholds are published for each asset. Maximum LTV, margin call and liquidation are 70%, 80% and 85% for Bitcoin; 65%, 75% and 82% for Ethereum; 60%, 72% and 80% for Solana; and 55%, 68% and 78% for BNB and HYPE. They are written into your final terms and shown on your loan page next to your live LTV (which LTV thresholds trigger notifications).

5. Can the thresholds change while my loan is open?

Ask: Can you raise the margin requirement mid-loan, and if so, how much notice do I get?

In regulated securities margin, firms "may increase the house requirements at any time and aren't required to provide you with advanced written notice" (FINRA). Those rules do not govern crypto lenders, which means the answer here depends entirely on your agreement. Ask, and get it in writing. The thresholds for an Arvexo loan are set in your final terms; whether and how any lender can vary them is a question for the agreement itself.

6. What is the notice period on a margin call, and how will I be told?

Ask: How much time do I have, through which channel, and what happens if I do not see it?

Then be honest with yourself about whether you could move collateral in that window, at night, from wherever you are. If the answer is no, the fix is a lower starting LTV rather than a better lender.

Arvexo's answer: each threshold triggers an email and a dashboard alert, starting with a warning level before any margin call, and the margin-call notice states the time you have to respond. Adding collateral or repaying part of the balance clears it (what a margin call is).

7. What does the loan actually cost, all in?

Ask: The interest rate, the origination fee, any early repayment charge, any liquidation fee, and any charge for adding collateral.

Under US consumer credit rules, the annual percentage rate is "a measure of the cost of credit, expressed as a yearly rate" (12 CFR 1026.22), and loan fees are part of the finance charge it is built from (12 CFR 1026.4). Whether those rules apply to a crypto-backed loan is unsettled, which is exactly why you should ask for the all-in number rather than assume a disclosure standard applies.

Illustrative, to show why the headline is not enough: on a $50,000 loan for six months, a quote of 11% with a 2% fee costs $3,750, while a quote of 12.5% with a 1% fee costs $3,625. The higher rate is the cheaper loan. Stretch the same two quotes to two years and the order reverses. Crypto loan APR, interest and fees works through where the crossover sits.

Arvexo's answer: interest at 12.5% a year, accruing daily on the outstanding principal and billed monthly; a 1% origination fee deducted from the principal when the loan is paid out; no fee for adding collateral; any early repayment fee shown in the payoff quote before you confirm; and any liquidation fee stated in your terms (how interest is calculated, can I repay my loan early).

8. Who regulates this lender, and for what?

Ask: Which authority, in which country, and covering which activity?

Be precise, because partial answers are common. Registration for anti-money-laundering supervision is not the same as being regulated as a lender.

In the UK, the Financial Conduct Authority says plainly that "crypto is largely unregulated in the UK" and that "it is highly unlikely you will be covered by the Financial Services Compensation Scheme" (FCA). The FCA has published its future crypto regime, under which "cryptoasset lending and cryptoasset borrowing (L&B) are not standalone regulated cryptoasset activities" but "will fall within the dealing, arranging, and/or safeguarding perimeter" (FCA PS26/18, September 2026). That regime commences on 25 October 2027, so it does not protect anyone borrowing today.

Good answer: A named authority, a named permission, and a registration number you can look up. A lender with none of these should say so plainly rather than imply otherwise.

9. Where am I allowed to borrow from?

Ask: Is the service available where I live, and what happens to my loan if that changes?

Most lenders restrict certain countries, and some restrict individual states or provinces. Check before you apply rather than after verification fails.

Arvexo's answer: the service is not available in sanctioned countries or in certain US states and Canadian provinces; the current list is in is Arvexo available in my country.

10. How do I get out?

Ask: Can I repay early, is there a charge, how long does collateral release take, and what does the process look like if I want to exit tomorrow?

The exit is the part borrowers plan least and need most. A lender that makes early repayment expensive is charging you for changing your mind.

Arvexo's answer: you can repay part or all of the balance at any time from your dashboard. The payoff quote shows the outstanding principal, interest accrued to date and any applicable early repayment fee before you confirm. After the final payment is matched, collateral is released to a wallet you have verified, typically within one business day (can I repay my loan early, when is my collateral released). Repaying a crypto-backed loan walks through the whole timeline.

The copy-and-paste version

Send this to any lender you are considering. The answers, or the absence of them, will tell you more than any comparison table.

1. Who holds my collateral, and is it a named third-party custodian?
2. Is my collateral segregated, and can it be lent out, staked or re-used while my loan is open?
3. In an insolvency, do I own my collateral or am I a creditor? Which clause says so?
4. What are the maximum starting LTV, margin-call and liquidation levels for my asset?
5. Can you change those levels mid-loan, and what notice do I get?
6. How long do I have to answer a margin call, and how will you contact me?
7. What is the total cost: interest, origination fee, early repayment charge, liquidation fee, top-up fee?
8. Which authority regulates you, for which activity, and what is your registration number?
9. Is the service available where I live?
10. Can I repay early, at what cost, and how long does collateral release take?

How to read the answers

Specific beats reassuring. "Held in segregated wallets with a named custodian, and clause 7.2 confirms we cannot re-use it" is worth more than a paragraph about institutional-grade security.

Written beats said. An answer in an email that contradicts the loan agreement is worth nothing. Ask which clause it lives in.

A refusal is an answer. A lender that will not put its liquidation terms in writing has told you what you need to know.

Compare the worst case, not the rate. Two lenders quoting the same rate can leave you in completely different positions after a 25% week.

Once the answers are in, put the numbers somewhere you can see them. The loan calculator will show you the collateral required and the margin-call price for any LTV you are considering, which makes questions four and six concrete rather than theoretical. Put the rest to us, or to anyone else you are considering, through the contact page.

Frequently asked questions

Is the lowest interest rate the cheapest crypto loan?

Not necessarily. A fixed origination fee weighs more on a short loan than on a long one, so a higher rate with a lower fee can be cheaper for a few months and dearer for a few years. Work out the total in dollars for the term you actually need. Crypto loan APR, interest and fees shows where the crossover sits.

What is rehypothecation, and why does it matter when comparing lenders?

Rehypothecation is a lender re-using collateral you posted, for example by lending it out. It is the practice that turned falling prices into failures in 2022. A lender that is contractually prohibited from re-using your collateral is in a different category from one that merely does not do it at the moment.

Which LTV numbers should a lender give me?

Three, per asset: the maximum starting LTV, the margin-call level and the liquidation level. With those three and your loan size you can work out the price at which you would be asked to top up and the price at which collateral would be sold.

Does a lower starting LTV make a loan safer?

Yes. Borrowing at 50% against Bitcoin leaves room for a 37.5% price fall before Arvexo's 80% margin-call level; borrowing at the 70% maximum leaves 12.5%. The lender's thresholds set the rules; your starting LTV sets how much room you have inside them.

Related reading

• How crypto collateral custody works
• Understanding crypto loan APR, interest and fees
• Repaying a crypto-backed loan: what to check before you borrow
• Margin calls and liquidation: what every borrower should know
• What is loan-to-value (LTV), and why does it matter?
• How crypto-backed loans work
• Security and custody at Arvexo

Sources

• US Securities and Exchange Commission, Investor Bulletin: Crypto Asset Interest-bearing Accounts, 14 February 2022
• US Securities and Exchange Commission, Press Release 2023-7, 12 January 2023
• United States Bankruptcy Court, Southern District of New York, In re Celsius Network LLC, Memorandum Opinion, 4 January 2023
• Federal Trade Commission, settlement with Voyager Digital, 12 October 2023
• Financial Industry Regulatory Authority, Know What Triggers a Margin Call
• Financial Conduct Authority, Cryptoassets
• Financial Conduct Authority, PS26/18: Cryptoasset Perimeter Guidance, 16 September 2026
• Code of Federal Regulations, 12 CFR 1026.22, Determination of the annual percentage rate
• Code of Federal Regulations, 12 CFR 1026.4, Finance charge
• Arvexo Help Center, How is my collateral stored and protected?
• Arvexo Help Center, How is interest calculated on my loan?

Collateral can fall in value and be sold. This article is for general informational purposes only and does not constitute financial, investment, legal, or tax advice.