Willy Woo: Bitcoin is ideal collateral for banks, but risky for borrowers
- —Willy Woo: BTC liquidity lowers lender risk but raises the risk of borrowers losing their coins
- —Coinbase offers USDC loans against BTC collateral with a limit of up to 5 million USDC via cbBTC and Morpho
- —At an 86% loan-to-value ratio, collateral is automatically sold with a liquidation penalty
- —The SEC approved spot Bitcoin ETFs in January 2024; the OCC and Fed eased bank crypto rules in 2025
Why it matters: Growing BTC-backed lending accelerates Bitcoin's integration into TradFi but increases forced-liquidation risks for holders.
Source: Happycoin.club