20 Important Things to Check Before Taking a Crypto Loan

20 Important Things to Check Before Taking a Crypto Loan
You're ready to unlock liquidity from your crypto without selling. Smart move—you avoid a taxable event and keep your upside exposure . But choosing the wrong platform can be expensive or even catastrophic . After the 2022 failures of Celsius, BlockFi, and Voyager, due diligence isn't optional . This checklist covers 20 critical things to check before you take a crypto loan, from rates and fees to custody and liquidation rules.
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Custody and Collateral Safety: Where Your Assets Live
The most important thing to check before you get a crypto-backed loan is who holds your crypto collateral and what they are allowed to do with it .

1. Who holds the collateral? Should be a regulated third-party custodian, not the lender itself. Arch Lending uses Anchorage Digital, the only federally chartered crypto bank in the US .
2. Is the custody arrangement insured? Ask for specifics. Some platforms offer $250M in insurance coverage through policies like Lloyd's of London .
3. Are wallets segregated? Your collateral should be held in an individually segregated wallet with on-chain addresses you can verify . No commingling.
4. Does the platform rehypothecate collateral? Rehypothecation means the lender can use your collateral for its own purposes—lending it out, trading it, or using it as collateral elsewhere . The answer must be a clear, verifiable "no."
5. Is the custody structure bankruptcy-remote? If the lender fails, your collateral should stay with the custodian, not become part of the lender's bankruptcy estate . Costs and Terms: Understanding the Real Price The headline interest rate tells you almost nothing about what you're actually paying . Check the full cost structure before you get a crypto loan.
6. What is the all-in APR? The APR includes interest plus fees. Ask for the APR, not just the "rate" .
7. Are there origination fees? Some platforms charge 0.49-1.49% or more; others waive them entirely .
8. Are there prepayment penalties? Most platforms allow early repayment without penalties, but you must confirm .
9. Are there monthly maintenance fees? Some lenders charge ongoing fees that aren't included in the headline rate .
10. Is the rate fixed or variable? A fixed rate gives you certainty. Variable DeFi rates can change dramatically with pool utilization .
11. What is the Loan-to-Value (LTV) ratio? The maximum LTV determines how much you can borrow. A lower LTV gives you a buffer against market drops . Liquidation and Risk Management: Avoiding a Forced Sale The biggest risk of any crypto loan is losing your collateral to liquidation. Before you get a crypto-backed loan, understand the margin call process.
12. What is the margin call threshold? The LTV level that triggers a warning. Typically 70-80% .
13. What is the liquidation threshold? The LTV level that triggers a forced sale of your collateral. Usually 85-95% .
14. What is the cure window? The time you have to respond to a margin call. DeFi protocols liquidate instantly; CeFi platforms often give you 24-48 hours .
15. Is liquidation partial or full? Some platforms sell just enough collateral to restore your LTV; others sell your entire position .
16. Is there optional liquidation protection? Some lenders offer add-on protection that prevents price-based liquidations. Strike offers a "volatility-proof" product that eliminates price-triggered liquidations at a 45% LTV with a 2.95% APR premium . ⚡ 🔥 💎👑◢◤ Contact Us ⚡ 🔥 💎👑◢◤ needhelp@omnilender.com ⚡ 🔥 💎👑◢◤ +1 (301) 760 2314 ⚡ 🔥 💎👑◢◤ www.omnilender.org Platform Trust and Regulatory Compliance The 2022 failures were not technology failures—they were structural failures of unlicensed lending and poor governance . Check these before you trust any platform.
17. Is the platform licensed? US lenders should have an NMLS license you can look up . SALT Lending was cited by California's DFPI for misrepresenting rates and failing to consider borrowers' ability to repay .
18. Does the platform have a track record? How many market cycles has the lender survived? Platforms like Ledn have processed over $10.2B in lifetime loans with zero client losses .
19. Are there proof-of-reserves audits? Independent, verifiable audits show that customer assets are fully backed. Ledn publishes quarterly Proof of Reserves verified by The Network Firm LLP .
20. Have there been regulatory actions? Check whether the platform has been subject to enforcement actions. California's DFPI took action against SALT for understating APRs and charging undisclosed fees . How OmniLender Can Help Choosing the right crypto loan platform involves navigating a complex landscape of rates, custody models, and regulatory frameworks. At OmniLender, we believe in empowering you with the knowledge to make informed financial decisions. While we are not a crypto lending platform, we are a trusted financial partner dedicated to helping people access the right solutions for their unique goals. We know that every financial journey is personal. Whether you are exploring a crypto-backed loan for liquidity or need guidance on more traditional financing, our team is here to provide clear, trustworthy advice. We focus on helping you make informed decisions that protect your assets and align with your long-term plans. Visit https://omnilender.org/ to learn more about how our expert guidance can support your financial well-being. Do crypto loans require a credit check? No. Most crypto-backed loans do not require a traditional credit check. Approval is based on the value of your crypto collateral and the loan-to-value (LTV) ratio you're requesting. This makes them accessible to borrowers who may not qualify for traditional financing . What happens if my crypto's value drops and I get a margin call? A margin call means your LTV is too high. You will have a limited window—often 24 to 48 hours—to add more collateral or make a partial repayment. If you don't, the platform may liquidate your collateral to cover the debt . Some lenders offer optional "volatility-proof" loans that remove price-based liquidations entirely . ⚡ 🔥 💎👑◢◤ Contact Us ⚡ 🔥 💎👑◢◤ needhelp@omnilender.com ⚡ 🔥 💎👑◢◤ +1 (301) 760 2314 ⚡ 🔥 💎👑◢◤ www.omnilender.org What is rehypothecation and why does it matter? Rehypothecation is when a lender takes your deposited collateral and uses it for its own purposes—lending it out, trading it, or using it as collateral elsewhere . If those activities go badly, your collateral may be at risk even if you're current on your loan. You should always confirm that a lender has a strict no-rehypothecation policy . Conclusion Taking a crypto loan can be a smart financial move, but due diligence is essential. Key takeaways are: 1) Always check custody and collateral safety—who holds your assets, whether they're segregated, and if there's a no-rehypothecation policy, 2) Understand the full cost—APR, origination fees, and prepayment penalties, and 3) Know your platform's liquidation rules—margin call thresholds, cure windows, and whether liquidation is partial or full. Are you ready to explore the best financial solutions for your unique situation? Having the right guidance is crucial. Visit https://omnilender.org/ today to connect with experts who can help you navigate your financial journey with confidence.