 TITLE: What Is Crypto Lending and How Does It Work? CONTENT: The Drawbacks of a Crypto Loan\n------------------------------\nWhile there are some key benefits that could appeal to certain consumers, there are a lot of downsides to consider as well:\n*   **Minimum borrowing requirements can be high.** While platforms can vary, you may simply not have enough holdings to secure the minimum loan amount the lender offers. With BlockFi, for instance, the minimum loan amount is $10,000, and with a 50% maximum loan-to-value ratio, that means you need $20,000 or more in holdings to get approved.\n*   **Repayment terms are short.** Crypto loans typically have terms of 12 month or less, which means you don't have a lot of time to repay them, especially compared with personal loans, which can offer longer terms. If you default on the debt, the platform may liquidate your holdings, which could result in a tax bill if your portfolio has gained in value since you first bought the digital assets.\n*   **Margin calls are a threat.** A margin call occurs when the value of your collateral assets drops below a threshold set by the lender. If the price of your crypto assets drops significantly—which is more likely with crypto versus traditional assets due to the volatility of the crypto market—you may need to deposit more into your account to keep your assets. If you don't, the platform may choose to sell your holdings, which could affect your tax liability.\n*   **Assets are inaccessible.** As long as your loan is outstanding, you can't use or trade your crypto assets. In other words, if the price of your assets tanks, you're stuck, and there's no insurance against the loss. END