In our last posts, we spoke about How Crypto Backed loans are different from peer-to-peer loans, what are the different types of crypto loans, advantages of crypto-backed loans, Risks associated with crypto lending, crypto lending platforms in US, Crypto Lending Platform in UK and Crypto Loans platform in Europe. Continuing our discussion further on Everything you need to know about Crypto-backed loans, today we would talk about five things you need to know about crypto loans.
Crypto Loans – Five Things You Should Know
Crypto Lending Platform are operational 24*7
Yes thanks to the nature of the services, the lending platform is operational 24*7. Most of the platform connects the lenders and borrowers from across the globe, making them operational 24*7. Unlike loans offered by banks or NBFC’s in the countries, the crypto lending market is a digitized platform where individuals could register from any part of the world.
Get FIAT against a crypto collateral
One of the beauty of crypto loan is the new business model that offers Fiat currency loan against crypto collateral. If users have cryptos in their wallets which are lying idle and he is in need of cash, a crypto loan with fiat model is the best bet. The lending platform offers secured wallets that could be used to deposit your crypto collaterals, and the loan amount could be issued within 2~24 hrs directly to your bank account, depending upon the platform policies.
Crypto Loans are only for RICH or millionaires
While Home loans, Car loans may be for the affluent community, crypto loan market offers microloans of even 50USD depending upon the platform you choose. Yes holding a financial portfolio of cryptos like bitcoin, Ethereum or Altcoins might be a game for millionaires, but the crypto lending market is open to all investors.
Crypto Loans are not regularised
While cryptocurrency itself is banned or restricted in many countries, many regions do allow the exchange to operate. However, the license and registration of a lending platform can be obtained in the US by the U.S. Securities and Exchange Commission (SEC) or in Canada the Ontario Securities Commission in Ontario. Even France and UK authorities, i.e., the Autorité des marchés financiers and the Financial Services Authority in the UK assist in providing a license to the P2P lending platforms.
Reg crypto to cash loans, there are a number of legal formalities and prove yourself worthy of maintaining a legal payment institution regarding financial stability, security or legality and then get a license to work as a lending platform.
Assets are unsecured, and returns are uncertain
All investments are subject to market risk, and most of the investment that fails [in crypto or non-crypto domain] is due to ignorance of the investor. Financial education is of utmost importance while making any investment, so in the crypto loan, the investor should be well aware of the volatility of the market, the offerings and the conditions that could lead to being a defaulter.
For the lender to mitigate risks associated with the cryptocurrency volatility, the lending platforms fix the collateral ratio from 10~70%. So the level of risk varies with each participant.
Nuo is a decentralised and transparent crypto banking platform. It acts as a blockchain powered financial control centre to store, spend, borrow and grow your crypto-currencies. Install the android app or try out our crypto backed loans platform.
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