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- Crypto loans allow access to liquidity without selling XRP.
- Borrowing can reduce taxable events compared to liquidating holdings.
- Suitable for high-net-worth investors, with careful risk management required.
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Crypto analyst BullRunners has sparked discussion in the XRP community with a recent video and tweet titled “Never Sell Your XRP: Use It To BECOME YOUR OWN BANK! (Crypto Lending Explained).” The commentary emphasizes a growing strategy for digital asset holders: leveraging crypto lending instead of selling to unlock liquidity while retaining ownership. This approach aims to help investors avoid capital gains taxes and maintain exposure to future price appreciation.
How Crypto Lending Works
According to BullRunners, the process is straightforward. Investors deposit XRP as collateral on a lending platform and receive a loan in stablecoins like USDT or USDC—or occasionally fiat currency. The collateral remains locked, meaning the investor retains ownership and any potential upside. Loan-to-value (LTV) ratios for XRP typically range from 15% to 75%, providing flexibility depending on risk tolerance.
Unlike traditional lending, crypto loans do not require credit checks or income verification. Instead, the loan amount is determined solely by the value of the deposited collateral. While convenient, this system carries risks such as forced liquidation if the value of XRP drops significantly.
Tax Benefits and Financial Planning
BullRunners highlighted the tax advantages of crypto loans versus outright sales. In the U.S., borrowed funds are generally not treated as taxable income, referencing IRS Publication 525. This allows investors to access liquidity without triggering a capital gains event. However, tax laws vary by jurisdiction, so consulting a financial advisor is essential.
The analyst illustrated this with an example: an investor who purchased XRP at $0.50 in 2024 with a $5 million investment could see it grow to over $30 million. Accessing $15 million via a loan rather than selling could significantly reduce tax liabilities.
Strategies and Risks
Crypto lending strategies vary in risk. Conservative LTVs minimize liquidation risk during volatility, while higher LTVs provide more upfront cash but increase potential losses. Advanced tactics include laddering loans across platforms, refinancing, or hedging with options and futures.
Investors must also consider interest rates, which range from 8%–13% annually, and custody risks since platforms hold the collateral. Market swings can trigger forced liquidations if collateral value drops below set thresholds.
Also Read: XRP Price Alert: Could September Trigger a 25% Drop?
BullRunners recommends crypto lending primarily for high-net-worth investors with significant XRP holdings. It is not suitable for beginners or those unable to manage collateral or interest payments. Loans should be reserved for structured financial goals or major investments, not everyday expenses.
Crypto loans offer a path for investors to unlock liquidity without selling XRP, potentially lowering tax liabilities and preserving future gains. For those with substantial holdings, borrowing against XRP may indeed be a modern way to “become your own bank.”
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Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
