One of Brazil’s leading cryptocurrency exchanges, Mercado Bitcoin, has started offering loans in Brazilian Real using crypto assets as collateral. This innovative product allows crypto holders to obtain liquidity without selling their assets, providing flexibility during the liquidation process. The loan amount will be limited to 30% of the crypto assets held on the exchange, and liquidations will be reviewed on a case-by-case basis rather than being automatic.
A New Era in Crypto-Backed Loans
Centralized crypto exchanges offering crypto-based products in Brazil continue to take significant steps in the financial services sector. In this context, Mercado Bitcoin has launched a crypto-backed loan product.
This product, which provides users with loans in the national currency, stands out as the first innovative service offered by the company following its payment institution license from the Central Bank of Brazil. To minimize the risk of losing their assets, the loan limit is restricted to 30% of the assets users hold on the exchange.
Liquidity and Flexibility Combined
Mercado Bitcoin states that before automatically liquidating users’ crypto assets, each situation will be thoroughly reviewed. The company’s CFO, Andre Gouvinhas, mentioned that the collateral ratio could be extended up to 35% if necessary, with each case being evaluated individually.
This approach differs from decentralized finance (DeFi) platforms, where liquidations occur automatically based on the strict rules of smart contracts.
Low Interest Rates and Investment Opportunities
Mercado Bitcoin offers a low monthly interest rate of 1.39% for this loan product, making it one of the most competitive rates among secured loans in Brazil. Initially, the exchange accepts only Bitcoin and Ethereum as collateral but plans to add other cryptocurrencies in the future. Users can utilize these loans to purchase cryptocurrencies on the platform or withdraw in the national currency for other purposes.
Gouvinhas emphasized that this new product allows users to obtain liquidity without selling their crypto assets, thus giving them the opportunity to capitalize on market opportunities. This way, customers can profit from market movements without liquidating their assets.
The flexible loan product offered by Mercado Bitcoin marks a new era in the Brazilian crypto market, enabling crypto asset holders to manage their financial strategies more effectively. The low costs and flexibility of crypto-backed loans seem poised to play a significant role in helping users achieve their financial goals.
