- Ledger has announced a Crypto Loan feature, shown at TOKEN2049 in Singapore, that lets owners borrow against bitcoin instead of selling it.
- The loans run on Morpho, a third-party lending , and the bitcoin has to be wrapped into a on another chain before it can be used as collateral.
- We could not find a Ledger announcement page for this; the detail below comes from Decrypt’s write-up, and the product description is the company’s own.
Borrowing against bitcoin rather than selling it has been a quiet obsession in crypto for years, mostly because selling creates a tax event and borrowing doesn’t. Ledger, the French hardware wallet maker, now says its users can do it from inside Ledger Live, with the final approval signed on the device itself.
Ledger’s whole proposition is that your coins stay under your control because the secret that moves them never leaves a chip in your hand. This product keeps that true of the signature and not of the money. To borrow against your bitcoin, the bitcoin has to leave the position the device was protecting and go and sit somewhere else, in a lending contract run by someone else, on terms that can sell it without asking you.
That isn’t a reason not to use it. It is the thing to understand before you do.
What actually happens to the coins
Bitcoin can’t be used directly as collateral in most lending protocols, because those protocols live on other and bitcoin’s own network doesn’t run that kind of software. So it gets wrapped: your bitcoin is locked away, and a token representing it is issued on another chain. That token is what the lender accepts.
The wrapped token is only worth something because somebody is holding the real bitcoin behind it. Whoever that custodian is, and what happens if they fail, is now part of your risk. Decrypt’s piece doesn’t name the wrapper Ledger uses, and we haven’t seen Ledger specify it.
From there the wrapped coins are deposited into Morpho, a lending protocol where the terms are enforced by code rather than by a loan officer. You get stablecoins out, usually dollar-pegged tokens, and you owe interest on them.
Liquidation, in money
This is the part worth working through with real numbers, because the word “” sounds procedural and the experience isn’t.
Say you post £40,000 of bitcoin and borrow £20,000 of stablecoins against it. Lending protocols don’t lend you the full value of your collateral; they insist on a buffer, because the collateral’s price moves. If bitcoin falls far enough that your buffer is gone, the protocol sells your collateral automatically to repay the loan, plus a penalty. There is no phone call, no grace period, and no appeal. You keep the borrowed money and you lose the bitcoin.
Bitcoin has fallen more than 50% from a high four times in the past decade. A loan that looks comfortable at today’s price is not necessarily comfortable at a price bitcoin has already traded at twice before. Anyone considering this should know their liquidation level in pounds before they borrow, not after.
A second kind of risk, sitting next to the first
When we wrote about the Coldcard key-generation failures, the assumption underneath the whole story was that the hardware was the safe end of the system and everything else, exchanges included, was where things went wrong. Hardware-based lending complicates that. The device can be flawless and you can still lose money, because the collateral is now exposed to the lending protocol’s code.
Morpho is an established protocol with a reasonable record, which is not the same as a guarantee. are software holding money, and software holding money gets attacked. That risk doesn’t replace device risk. It is added to it.
What this means if you’re in the UK
No source we’ve seen mentions this, and it matters more here than anywhere else in the story. A loan taken out through a protocol is not a regulated consumer credit agreement. The protections you’d expect from a UK lender don’t apply: no affordability assessment, no Financial Ombudsman Service if something goes wrong, no FSCS cover on anything you deposit. If the contract is exploited or the collateral is liquidated at a bad moment, there is no UK body that can order anyone to make you whole.
Borrowing against bitcoin also doesn’t make the tax question disappear, it changes its shape. Wrapping a coin into a token on another chain may itself be a disposal for capital gains purposes depending on how HMRC views the particular arrangement, which is a question for an accountant rather than a product page. Our crypto tax guide covers the general position.
What to watch
Whether Ledger publishes the detail: which wrapped bitcoin it uses, who custodies the underlying coins, what loan-to-value ratio triggers liquidation, and what the interest rates actually are. Those four numbers decide whether this is a sensible tool or an expensive way to lose a long-held position, and none of them were in the announcement coverage.
Beyond that, whether other hardware wallet makers follow. If they do, the quiet redefinition of what a hardware wallet is for, from storage to a front end for lending, will be the bigger story than any one product launch.