Credit Against a Client's Own Crypto Holdings

A client who holds crypto with an institution and wants cash has two moves: sell, which crystallises a disposal and ends the position, or borrow against the holding. Lending keeps the client invested while giving them liquidity, and gives the institution a credit product on assets it already custodies. The product is the Lombard loan, long standard in private banking, applied to a new collateral class: the institution advances fiat or a stablecoin against a pledged quantity of crypto, marks the collateral continuously, and sells part of it if the ratio deteriorates past a disclosed level. Because the collateral is already custodied, priced and screened, the work that remains is the credit machinery, and the audited, open-source credit primitives that regulated firms already use carry no licence cost.

Named institutions now run this at scale in three structurally different ways. Sygnum Bank lends on its own balance sheet against more than 20 eligible collateral tokens; Coinbase routes bitcoin- and ether-backed USDC borrowing to an on-chain money market and reported more than USD 2.17 billion originated in its US product as at 14 April 2026; Relai distributes bitcoin-backed loans up to 50 per cent loan-to-value that Sygnum Bank originates; and Cantor Fitzgerald runs a third-party desk with Anchorage Digital and Copper as custodians. The European legal position was recently clarified: on 18 June 2026 ESMA published a question and answer confirming that authorised crypto-asset service providers may offer crypto-asset lending, and that the lending service itself sits outside MiCA. Directive (EU) 2023/2225 on consumer credit applies from 20 November 2026, which fixes a date by which any institution lending to consumers in the European Union has to have settled how the agreement is documented and how creditworthiness is assessed.

It fits an institution that can perfect a pledge over client collateral, holds an authorisation permitting credit in the borrower's country or has a licensed lender behind it, and serves clients whose holdings are large enough that selling is a considered decision.

It does not fit where clients hold crypto at venues the institution cannot reach; where the institution wants clients to earn on holdings rather than borrow against them; where an EU credit institution plans a large own-book exposure, because the Article 501d CRR3 capital treatment caps that route before demand does; or where consumer lending is planned across several EU countries at once, since each is a separate authorisation question.

The collateral is already custodied, already priced and already screened, so the work that remains is the credit machinery on top of it. What has to be built sits in three places: collateral control wired into a credit engine, independent price verification that can be defended to a client whose assets were sold, and the loan mapped into the core ledger, the client statement and the tax file. The credit primitives themselves are audited and open source, and carry no licence cost.

The regulatory position is straightforward. Crypto lending sits outside MiCA scope - Recital 94 says MiCA does not address lending and borrowing, and ESMA confirmed on 18 June 2026 that an authorised provider may offer it while the service itself stays unregulated. There is no passport, so the authorisation to grant credit is national, country by country. Directive (EU) 2023/2225 applies from 20 November 2026 where the borrower is a consumer.