Last checked 1 November 2026. This page explains how loans secured on bitcoin work and what the official sources say. It does not name or rate any lender. Loan terms, tax and accounting depend on the contract, so your lawyer and accountant decide how they apply. If anything here conflicts with the linked source, the source wins.
A company that holds bitcoin may be offered a loan in pounds or dollars, secured on that bitcoin. The appeal is obvious: cash without selling. The risks are less obvious. If the price falls, the lender can ask for more collateral at short notice, and if the company cannot provide it, the lender sells the bitcoin. Some lenders can also use the collateral for their own purposes while the loan is open, which turns the company into an unsecured creditor if the lender fails.
This page explains the mechanics, the risks, and the official UK and US rules on tax, accounting, company law and regulation, then what a board should approve before signing anything.
What this means for your company
- Treat borrowing as a separate board decision with its own limits. Plan for margin calls and forced sales before signing.
- Check in writing whether the lender can reuse the collateral: lender failure can put the bitcoin at risk.
- Ask your lawyer and accountant to review the collateral terms, tax and accounting. In the UK, a company charge may need registration within 21 days.
How a bitcoin backed loan works
The company moves bitcoin to the lender, or to an account or multisig arrangement the lender can control, and receives a cash loan. The loan to value ratio (LTV) is the loan divided by the market value of the collateral. The contract sets three levels: the LTV at the start, a higher margin call level at which the company must add collateral or repay part of the loan, and a liquidation level at which the lender may sell collateral to repay itself.
- Post collateralBitcoin moves to the lender or a controlled account.
- Receive cashThe loan is paid in pounds or dollars.
- Price movesLTV rises as the bitcoin price falls.
- Margin callAdd collateral or repay within the notice period.
- Repay or liquidateRepay and recover the bitcoin, or the lender sells it.
A worked example
Watch the 60 second version on YouTube.
Illustrative figures. The price, loan size and LTV levels below are invented to show the arithmetic. They are not a forecast and not any provider's terms.
The formula is simple: the price that triggers a level is the loan divided by (the number of bitcoin times that LTV). The bitcoin price can move a long way in a short time, so a level that looks distant on the day the loan starts may not stay distant. A loan that is called at night or at a weekend needs someone at the company who can act at night or at a weekend.
A real disclosure
B HODL Plc, a UK company listed on the Aquis Growth Market, reported in its results for the year to 30 June 2026 that cryptoassets with a carrying amount of £500,462 were pledged as security for amounts due to a related party. It said that on 8 July 2026 it drew a further £100,000 bitcoin backed loan from CoinCorner, secured by 4.348677 BTC, and that CoinCorner is a significant shareholder whose directors and employees sit on its board. The results set out the loan, the collateral and the relationship in plain terms, which is the standard any board paper should meet.
Source: B HODL (RNS): Audited final results for the year ended 30 June 2026: 167.487 BTC at 27 October 2026.
The risks, one by one
| Risk | What can happen | What to check |
|---|---|---|
| Liquidation | A fast fall in price takes the LTV past the liquidation level before the company can add collateral. The lender sells, often at a poor price. | Margin call and liquidation levels, notice period, how and when the lender contacts you, whether you can top up with cash. |
| Rehypothecation | The lender lends, sells or pledges your collateral to someone else. If the lender fails, you may have only an unsecured claim. | A clause that says, in plain words, that the collateral is held for you, segregated and not reused. |
| Counterparty failure | The lender becomes insolvent or freezes withdrawals. Repaying the loan may not get the bitcoin back quickly, or at all. | Who holds the keys, in whose name, under which law, and what happens to collateral in the lender's insolvency. |
| Custody | Collateral sits in a wallet the company does not control, outside its normal 2 of 3 or custodian arrangement. | Whether the collateral can sit in a multisig where the company holds a key, and who can sign what. |
| Cost and terms | Interest, fees and default interest add up. A default under another agreement may also trigger this loan. | Total cost in pounds or dollars, early repayment terms, cross default clauses. |
| Tax and accounting | Posting or losing collateral may be a disposal for tax. Liquidation certainly is. | Ask your accountant before you sign, with the contract in hand. |
The SEC cases below were about customers lending crypto to platforms, not companies borrowing from them. They are relevant because a borrower whose collateral may be reused is in a similar position if the platform fails. The SEC said BlockFi agreed to pay a $50 million penalty to the SEC, plus $50 million to 32 states, over its retail crypto lending product. It said Celsius effectively halted its platform on 12 June 2022. It said that in November 2022 Genesis announced it would not allow Gemini Earn investors to withdraw their crypto assets.
Source: SEC: Press release 2022-26: BlockFi agrees to pay $100 million in penalties over its retail crypto lending product, SEC: Press release 2023-133: SEC charges Celsius Network and its former CEO, SEC: Press release 2023-7: SEC charges Genesis and Gemini over the Gemini Earn lending programme.
Questions to ask any lender
- Where exactly is the collateral held, in whose name, and who holds the keys?
- May you lend, sell, pledge or otherwise use the collateral while the loan is open? Show me the clause.
- What are the starting, margin call and liquidation LTVs, and how is the price measured?
- How much notice do we get for a margin call, through which channels, and at what hours?
- Can we meet a margin call with cash as well as bitcoin? Can we repay early without a penalty?
- What happens to our collateral if you become insolvent? Which law governs the contract?
- Are you authorised or registered for this activity where we are? Give me the register entry.
UK: Corporation Tax
HMRC's guidance on collateral is written for decentralised finance, but the test it uses is about ownership, not technology. It says that where a lending platform is allowed to deal as it wishes with tokens received as collateral, that is a strong indicator that the platform has acquired beneficial ownership, and if it has, the borrower has disposed of the tokens. Where the platform is specifically restricted from dealing with them, that points the other way. A disposal is a chargeable gain or loss for a company, worked out under the normal pooling rules.
Source: HMRC: CRYPTO61640: DeFi lending, chargeable gains, collateral (beneficial ownership test), HMRC: CRYPTO41250: Corporation Tax on chargeable gains, what counts as a disposal, HMRC: CRYPTO41350: Corporation Tax on chargeable gains, pooling and the same day and ten day rules.
A liquidation by the lender is a sale of the company's bitcoin, so it is a disposal. Interest the company pays on a loan of money is normally dealt with under the loan relationships rules, which HMRC explains in its Corporate Finance Manual. Whether and how much is deductible depends on the company's facts.
Source: HMRC: CFM30000: Corporate Finance Manual, loan relationships.
The government has announced a 'no gain, no loss' treatment for certain cryptoasset loans from 6 April 2027. The policy paper says it affects individuals and trustees and amends Capital Gains Tax law. It does not bring companies into that treatment.
UK: registering a charge
The Companies Act says that when a company creates a charge, the registrar must register it if a statement of particulars is delivered within 21 days, beginning with the day after the charge is created. If it is not delivered in time, the charge is void against a liquidator, an administrator and any creditor of the company. Whether a particular collateral arrangement creates a registrable charge, or is an outright transfer, is a legal question about the contract. Check with your lawyer before you sign.
Source: legislation.gov.uk: Companies Act 2006, section 859A: charges created by a company, registration within 21 days, legislation.gov.uk: Companies Act 2006, section 859H: consequence of failure to deliver a charge.
UK: accounts and regulation
If the company keeps beneficial ownership of the collateral, the bitcoin usually stays on its balance sheet and the loan appears as a liability. If it gives up ownership, the accounting may change. Disclose pledged assets and the terms in the notes, as B HODL did. Your accountant decides the treatment under FRS 102 or FRS 105.
Source: FRC: FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland, FRC: FRS 105: The Financial Reporting Standard applicable to the Micro-entities Regime.
The FCA's policy statement PS26/11 sets out the rules for cryptoasset lending and borrowing under the new UK regime, including protections for retail clients. Which protections apply to a company depends on how the firm classifies it. Until the regime starts, check whether a firm is registered or authorised on the FCA register.
Source: FCA: PS26/11: cryptoasset regime policy statement, including lending and borrowing (PDF), FCA: Overview of our cryptoassets regime policy statements (30 June 2026), FCA: Financial Services Register: check a firm.
US: federal tax
The IRS treats bitcoin as property. We have not found IRS guidance that deals specifically with posting bitcoin as collateral for a loan. Whether a transfer to a lender is a sale or exchange will depend on the terms, including whether the lender can sell or reuse the bitcoin. Check with your adviser before you sign. A liquidation is a sale, and the gain or loss is worked out lot by lot.
Source: IRS: Notice 2014-21: virtual currency is treated as property for federal tax purposes, IRS: Frequently asked questions on virtual currency transactions.
Business interest expense may be limited under section 163(j). The IRS explains that a small business which meets the gross receipts test is exempt. For tax years beginning in 2026, Revenue Procedure 2025-32 sets that test at average annual gross receipts of $32,000,000 or less over the previous three years.
Source: IRS: Questions and answers about the limitation on the deduction for business interest expense (section 163(j)), IRS: Revenue Procedure 2025-32: 2026 inflation adjusted amounts, including the $32,000,000 gross receipts test (PDF).
US: accounts and regulation
Under ASU 2023-08, bitcoin the company still owns is measured at fair value, and the standard requires disclosure of crypto assets that are subject to contractual sale restrictions. Collateral the company has given up may need different treatment. Your auditor or CPA decides.
Source: FASB: ASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60).
Lending is regulated by the states as well as federally, and the SEC cases above show that some crypto lending products have been treated as securities. Check a lender's licences in your state and ask your lawyer.
What the board should approve
- Whether to borrow at all. Record why a loan is better than selling a little bitcoin, raising other finance, or doing nothing.
- Limits. A maximum starting LTV, a maximum loan, and the cash or bitcoin kept aside to meet a margin call.
- Collateral terms. No reuse of collateral, or a clear decision to accept it with the risk written down.
- Who acts. Who watches the LTV, who can top up, and who signs, at any hour.
- Legal and tax sign off. Charge registration in the UK, the tax view on posting collateral, and the accounting treatment.
- Conflicts. If the lender is connected to a director or shareholder, declare it and follow the conflicts rules.
Source: legislation.gov.uk: Companies Act 2006, section 172: duty to promote the success of the company, legislation.gov.uk: Companies Act 2006, section 174: duty to exercise reasonable care, skill and diligence, legislation.gov.uk: Companies Act 2006, section 175: duty to avoid conflicts of interest, legislation.gov.uk: Companies Act 2006, section 177: duty to declare interest in proposed transaction, Delaware Code: Title 8, chapter 1, subchapter IV, section 141: board of directors, including reliance on reports in 141(e).
Our judgement, not a rule: for most small companies the simplest policy is not to borrow against the holding. If the board does decide to borrow, a low starting LTV, no reuse of collateral and cash set aside for a margin call reduce the chance of a forced sale. Using borrowed money to buy more bitcoin adds a further layer of risk that a small company should think hard about.
Read next
- Directors' duties and bitcoin: the duties that apply to the decision.
- Board paper outline: a structure for the proposal, with a fillable download.
- Company tax on bitcoin: disposals, pooling and lots.
- Custodian due diligence: the same custody questions apply to a lender.
- Bitcoin yield for a company: lending bitcoin out for a return.
Sources
Primary sources only. Each link was checked on 1 November 2026. Rules change, so confirm the current version with your adviser.
- B HODL (RNS)Audited final results for the year ended 30 June 2026: 167.487 BTC at 27 October 2026
- SECPress release 2022-26: BlockFi agrees to pay $100 million in penalties over its retail crypto lending product
- SECPress release 2023-133: SEC charges Celsius Network and its former CEO
- SECPress release 2023-7: SEC charges Genesis and Gemini over the Gemini Earn lending programme
- HMRCCRYPTO61640: DeFi lending, chargeable gains, collateral (beneficial ownership test)
- HMRCCRYPTO41250: Corporation Tax on chargeable gains, what counts as a disposal
- HMRCCRYPTO41350: Corporation Tax on chargeable gains, pooling and the same day and ten day rules
- HMRCCFM30000: Corporate Finance Manual, loan relationships
- GOV.UKPolicy paper: tax treatment of cryptoasset loans and liquidity pools (individuals and trustees, from 6 April 2027)
- legislation.gov.ukCompanies Act 2006, section 859A: charges created by a company, registration within 21 days
- legislation.gov.ukCompanies Act 2006, section 859H: consequence of failure to deliver a charge
- FRCFRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland
- FRCFRS 105: The Financial Reporting Standard applicable to the Micro-entities Regime
- FCAPS26/11: cryptoasset regime policy statement, including lending and borrowing (PDF)
- FCAOverview of our cryptoassets regime policy statements (30 June 2026)
- FCAFinancial Services Register: check a firm
- IRSNotice 2014-21: virtual currency is treated as property for federal tax purposes
- IRSFrequently asked questions on virtual currency transactions
- IRSQuestions and answers about the limitation on the deduction for business interest expense (section 163(j))
- IRSRevenue Procedure 2025-32: 2026 inflation adjusted amounts, including the $32,000,000 gross receipts test (PDF)
- FASBASU 2023-08, Intangibles: Goodwill and Other, Crypto Assets (Subtopic 350-60)
- legislation.gov.ukCompanies Act 2006, section 172: duty to promote the success of the company
- legislation.gov.ukCompanies Act 2006, section 174: duty to exercise reasonable care, skill and diligence
- legislation.gov.ukCompanies Act 2006, section 175: duty to avoid conflicts of interest
- legislation.gov.ukCompanies Act 2006, section 177: duty to declare interest in proposed transaction
- Delaware CodeTitle 8, chapter 1, subchapter IV, section 141: board of directors, including reliance on reports in 141(e)
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This is general information and education only. It is not financial, investment, tax, accounting, legal or regulatory advice, and it is not a recommendation to buy, sell or hold bitcoin or any other asset. It does not take account of your circumstances or those of your company. You must obtain your own official professional advice to confirm this information is correct before acting on it.
Rules change. This information is correct to our understanding at the last-reviewed date, but it may be incomplete or out of date, and official sources take precedence. Bitcoin is volatile. A company that buys it could lose some or all of the money it puts in.
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