Bitcoin-Backed Credit
Shakepay Introduces BLOC, Allowing Canadians to Borrow Against Bitcoin Without Selling It
Shakepay has launched BLOC, a Bitcoin-backed Line of Credit that lets Canadians borrow money against their bitcoin without selling it. The product, announced this week, is part of a push by the Montreal-based crypto platform to make bitcoin more useful in everyday life, according to Montreal Gazette.
Eligible customers can use their bitcoin as collateral to access a revolving line of credit. They can track their available credit, payments, collateral, and loan-to-value ratio all in one place, Toronto Sun reported.
How the BLOC Credit Line Actually Works
BLOC works like a traditional line of credit, but bitcoin is the collateral instead of a home or car. Customers pledge their bitcoin held with Shakepay and can borrow against it. They do not need to sell their bitcoin to get cash. The key metric to watch is the loan-to-value ratio, which measures how much debt a customer carries compared to the value of their bitcoin collateral, according to Calgary Sun.
If bitcoin's price drops sharply, the loan-to-value ratio rises. This is the main risk for borrowers. Shakepay's platform lets customers monitor that ratio in real time so they can act quickly if needed, Recorder reported.
Shakepay Credit Gets Regulatory Approval to Operate
The product is offered through Shakepay Credit Inc., a separate entity registered as a Money Service Business with FINTRAC, Canada's financial intelligence agency. The company also received exemptive relief from regulators to offer bitcoin-backed credit to eligible customers, according to The Sudbury Star.
Exemptive relief means regulators granted Shakepay an exception from certain standard rules, allowing it to offer this new type of product. Getting that approval is a significant step for a crypto company in Canada, where financial regulation is strict, Ontario Farmer noted.
A Week of New Bitcoin Products From Shakepay
BLOC is not the only new product Shakepay rolled out this week. The company launched several bitcoin-focused features in quick succession, all aimed at making bitcoin easier to use in daily Canadian life, according to Pincher Creek Echo.
The flurry of launches signals that Shakepay is moving beyond a simple buy-and-hold crypto app. By letting customers borrow against bitcoin, the company is stepping into territory traditionally held by banks and credit unions, Hanna Herald reported.
Why Borrowing Against Bitcoin Appeals to Long-Term Holders
For bitcoin holders who believe the price will rise over time, selling bitcoin to cover expenses feels costly. If the price doubles later, they miss those gains. A bitcoin-backed credit line lets them get cash now while keeping their bitcoin, according to Fairview Post.
This type of product is already popular in the United States through platforms like BlockFi and Coinbase. BLOC brings a similar option to Canadian customers for the first time through a regulated, domestic platform, Northern News reported.
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