Bitcoin-Backed Loans: Why Borrowers Need Lenders Who Truly Understand

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Borrowers Deserve Lenders Who Understand <a href="https://jpyeur.com/btc-usd/">Bitcoin</a>

People naturally connect with stories. A compelling story helps us make sense of the world around us in a way that’s easy to grasp. Therefore, it’s not surprising that the story of Bitcoin gaining acceptance within established institutions has been presented as straightforward and progressive.

Matt Luongo, founder and CEO of Thesis (the venture studio behind projects like Mezo, tBTC, and Lolli), wrote this article. A software developer with a long history in Bitcoin – he’s been building on the technology since 2014 and previously co-founded Fold, a company now listed on Nasdaq – Luongo’s current work stems from his own experience trying to secure a mortgage using Bitcoin. This led him to recognize the need for a better credit system within the Bitcoin ecosystem. Thesis has received funding from prominent investors including a16z, Polychain, ParaFi, and Pantera. Luongo frequently shares his insights on topics like self-custody finance, Bitcoin-based lending, and the future of financial services.

What is actually happening on the ground is messier and far more human. Since the SEC approved spot Bitcoin exchange-traded products, FASB moved to fair value accounting for crypto assets, and Cantor Fitzgerald launched a Bitcoin financing business, the market has become much better at letting firms own Bitcoin. It still has not learned how to lend against it well.

Each time a well-known company launches a Bitcoin product, it’s like another piece of the puzzle falling into place. However, those announcements often represent years of behind-the-scenes work that went unnoticed.

There’s someone within the company who truly understands Bitcoin. They’ve been involved for a long time, have researched it thoroughly, and are deeply convinced of its potential. They consistently share this understanding during meetings, when making plans, assessing risks, and discussing financial strategy.

More importantly, Bitcoiners are everywhere.

They’re working in insurance, venture capital, logistics, and payments – and in operational positions within companies that don’t consider themselves focused on cryptocurrency.

When you realize Bitcoin enthusiasts are forming connections within established systems, the potential of Bitcoin starts to become clearer.

Begin again

For the last decade, building in Bitcoin has focused on the front door.

How do you get people in?

How do you help them buy?

How do you help them save?

How do you make self-custody less daunting?

Those past experiences were important, and many still are. However, a new challenge has emerged that we haven’t adequately prepared for.

What happens after Bitcoin is already on the balance sheet?

What happens when conviction is no longer the barrier, but capital efficiency is?

From my analysis, many companies are further along in this process than they think. They already possess the core element – someone internally who recognizes the value. The biggest hurdle I’m seeing is a lack of financial mechanisms capable of properly assessing and funding these opportunities.

The market hasn’t fully recognized this change yet. Bitcoin is evolving beyond just being an investment; it’s becoming an asset businesses can use as security for loans.

It’s now easy to invest in Bitcoin, but companies that already own it haven’t received much support.

When those firms go looking for credit, they enter a market where Bitcoin-backed borrowing is still unusually scarce. And when it is available, rates are often punishing (>9%). Bitcoin may be one of the most liquid and pristine forms of collateral in the world, but the moment a business tries to borrow against it, the market still treats that decision as exotic.

People who borrow money deserve lenders who take the time to understand their needs. Increasingly, companies are seeing Bitcoin not just as a temporary investment, but as a long-term financial strategy. This approach helps them rely less on traditional banks, interest rate fluctuations, and unpredictable government policies.

The system they’re borrowing against wasn’t built for them

Businesses are struggling because lenders aren’t properly assessing their assets and future potential. This results in high interest rates and inflexible loan terms. Unfortunately, the financial system often favors those closest to major financial institutions over companies that demonstrate sound financial management and the ability to overcome challenges.

That is the Cantillon Effect in practice.

As a crypto investor, I’ve learned that getting in early on promising projects is key – the closer you are to where new money is flowing, the cheaper it is to acquire those assets. The longer you wait, the more expensive it becomes. It’s like a ‘proximity tax’ – those of us building long-term positions in solid projects often end up paying more than those who got in closer to the start, and honestly, a lot of companies just aren’t positioned well to take advantage of that early access.

This often leads to borrowers being matched with lenders who lack a clear understanding of their needs or the assets backing their loans.

Bitcoin opens the door to a different arrangement.

Because Bitcoin exists outside of traditional financial systems, getting a loan using it as collateral shouldn’t require the same connections or approvals as traditional loans. Loans backed by Bitcoin don’t need to be affected by the problems within current money markets. It should be standard practice to borrow money by using Bitcoin as solid, reliable collateral, with loan terms based on its actual value.

Meeting the market where it is

Throughout my work, I’ve been dedicated to expanding what Bitcoin can do. I’ve consistently kept in mind that the Bitcoin community isn’t just made up of highly technical developers or those who exclusively manage their own funds. It’s much broader than that.

Today, people involved with Bitcoin come from all walks of life and occupy many different roles. Some are deeply technical, working directly with the underlying code. Others focus on the financial side, managing Bitcoin as an asset within companies and tracking its performance. This is important not simply because of individual enthusiasm, but because it influences what businesses choose to invest in, protect, and develop around Bitcoin.

The opportunity now is to meet the market where it is.

For some, that still means sovereignty and self-custody. For others, it means something more basic and more urgent: credit markets that can treat Bitcoin as serious collateral, custody that institutions can trust, and loan structures that reflect the strength of the asset instead of defaulting to legacy assumptions. The market is moving in that direction, from qualified custody to dedicated Bitcoin financing, but it is still early.

This is the missing layer in Bitcoin’s financial maturation.

As an analyst, I’m increasingly convinced that the quality of collateral matters immensely, and we’ll see that play out dramatically over the next ten years. Different types of credit carry different levels of risk, and that’s becoming clearer. The market is evolving alongside these changes in collateral, and firms that recognize this – those who treat Bitcoin as a core asset rather than a speculative gamble – will be the ones who thrive. Those who don’t adapt will likely fall behind.

The future of Bitcoin hinges on who can successfully use it as collateral for loans, develop new applications based on it, and confidently guarantee its stability.

Financial institutions that recognize the potential of Bitcoin won’t simply offer ways to invest in it. They’ll play a key role in shaping the future of lending and credit.

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2026-05-15 09:58