Can digital assets be used as collateral for loans?

Yes, digital assets can be used as collateral for loans through decentralized finance (DeFi) platforms and some cryptocurrency lenders. You deposit crypto as security, and receive a loan in stablecoins or other cryptocurrencies. For example, you might lock 1 Bitcoin to borrow $30,000 in USDC. The loan amount is typically less than your collateral's value—often 50-75%—to protect lenders if prices drop. If your collateral's value falls below a certain threshold, lenders can liquidate it to recover their funds. This process allows crypto holders to access cash without selling their assets, though it carries risks including liquidation if market prices decline significantly.