Ethereum-backed loans: How to borrow against your ETH

Yes, you can borrow against your Ethereum without selling it: ETH is accepted collateral for a crypto-backed loan, so you pledge your ETH, receive cash, and get your coins back when you repay. With Figure, ETH sits alongside Bitcoin and Solana as eligible collateral, the loan carries a fixed rate up to 75% loan-to-value^{2: Navigates to numbered disclaimer}, approval is same-day with only a soft credit pull^{5: Navigates to numbered disclaimer}, and an optional Liquidation Protection^{4: Navigates to numbered disclaimer} feature that can shield your ETH from a forced sale if prices fall. Borrowing this way lets a long-term ETH holder raise cash while keeping their position, and it generally does not trigger the taxable event^{3: Navigates to numbered disclaimer} that selling would.

If you hold Ethereum with conviction, selling to raise cash is the outcome you are usually trying to avoid. It ends your exposure to any future upside and, if your ETH has appreciated, it can trigger capital gains tax. An ETH-backed loan is the alternative: you keep the asset, pledge it as collateral, and borrow against its value.

Yes. Ethereum is one of the major assets that crypto-backed lenders accept as collateral, and Figure accepts ETH alongside Bitcoin and Solana. The structure is the same one that applies to any secured loan: you pledge an asset worth more than the amount you borrow, the lender advances cash against a percentage of that value, and you reclaim your collateral when you repay.

For an ETH holder, that means you can put your Etherum to work as collateral without giving it up. You are not selling, so your ownership does not change and your long-term thesis on Ethereum stays intact. When the loan is repaid, the ETH is released back to you.

The terms are not ETH-specific. Figure's crypto-backed loan allows a maximum loan-to-value of 75%, carries a fixed interest rate, has a one-year term, a 1% origination fee, and a minimum loan of $5,000, whether the collateral is ETH, BTC, or SOL^{2: Navigates to numbered disclaimer}. Approval is same-day and does not require a hard credit pull^{5: Navigates to numbered disclaimer}. What is worth thinking through as an ETH holder is how Ethereum's price behavior interacts with those terms, because that is where your real risk lives.

Ethereum, like other cryptocurrencies, can move sharply in either direction, and that price behavior is the single most important thing for an ETH borrower to understand. Your loan is governed by loan-to-value (LTV) — the ratio of what you owe to what your collateral is worth. You borrow at a starting LTV below the maximum, but that number does not stay put. When ETH falls, the same loan represents a larger share of a smaller collateral pool, so your LTV rises. When ETH rises, your LTV falls and your cushion grows.

If your LTV climbs past a set threshold, the liquidation LTV, the lender can sell your ETH to cover the loan. This is the core risk: a drop in the price of Ethereum can trigger liquidation, and you can lose your collateral. An ETH-backed loan does not protect your principal or guarantee you keep your position. Borrowing more conservatively relative to the value of your holdings leaves more room for ETH to fall before you approach that threshold.

A simplified example shows how the math moves (the figures below are illustrative, not real ETH prices or a committed platform parameter):

• You pledge $100,000 of ETH and borrow $50,000, a starting LTV of 50%.

• ETH falls 30%, so your collateral is now worth $70,000.

• Your effective LTV is now about 71% ($50,000 / $70,000).

• If the liquidation threshold were 85%, a further drop could trigger a forced sale of your ETH, potentially near the bottom.

Treat 85% and the 30% drop as illustration rather than fixed rules; the actual threshold depends on the platform and the loan, and ETH's real path is unknowable in advance. The lesson is not the specific numbers but the shape: the larger your starting cushion, the more ETH volatility you can absorb before liquidation is on the table.

The reason to borrow against Ethereum rather than sell usually comes down to two things: keeping your exposure and avoiding a taxable event^{3: Navigates to numbered disclaimer}.

Keeping exposure. If you believe ETH is worth more later, selling to raise cash means giving up the upside you were holding for. A loan lets you access cash now while your Ethereum stays yours. If it appreciates during the loan term, you still benefit from that move; if it falls, you carry the same price risk you would have as a holder, plus the liquidation risk the loan adds.

Avoiding a taxable event. In many jurisdictions, selling ETH is a capital gains event. If you bought Ether well below its current price, selling to raise cash can mean owing tax on that appreciation. Borrowing against your ETH is generally not a taxable event, because you receive loan proceeds rather than sale proceeds and your ownership does not change. This is general information, not tax advice; tax treatment of crypto-backed loans varies by jurisdiction and individual circumstances. Consult a tax professional before making decisions.

The trade-off is honest: a loan is not free. You pay interest and an origination fee, and you take on liquidation risk you would not have if you simply held. Borrowing makes sense when the cost and risk of the loan are acceptable relative to the tax and lost exposure of selling — a judgment only you can make for your own position.

Because ETH can drop sharply, the possibility of liquidation is the part of an ETH-backed loan most worth planning around. Two things can put time between a price drop and a forced sale: a margin-call warning, if the platform alerts you as your LTV approaches the threshold, and a specific product feature.

Figure offers Liquidation Protection^{4: Navigates to numbered disclaimer}: for an upfront, non-refundable fee of 2% of the loan amount, Figure agrees not to perform margin calls or liquidations based on price movement during the loan term, so a temporary ETH drawdown does not force a sale. The protection is narrow by design — it covers price-based liquidation only, not missed payments, term expiration, or loan-term violations — and it is available only in select states (CA, NY, FL, PA, AL, AK, GA, HI, MA, UT). For a full walkthrough of what it does and does not cover, see the hidden costs of crypto liquidation.

The process for an ETH-backed loan follows the same lifecycle as any crypto-backed loan (covered in full in the general guide):

1. Decide how much to borrow. Choose a loan amount and starting LTV you are comfortable carrying given how much ETH volatility you can absorb. A lower LTV leaves more cushion before liquidation. 

2. Choose your LTV at a fixed rate. You borrow up to 75% of your ETH's value. The rate is fixed for the one-year term, so it does not change with market swings while you hold the loan.^{2: Navigates to numbered disclaimer}

3. Deposit your ETH as collateral. Your Ethereum is held for the duration of the loan and released when you repay.

4. Receive cash. Loan proceeds are funded to your account.

5. Optionally add Liquidation Protection. In eligible states, you can pay the 2% upfront fee to defer price-based liquidation for the term^{4: Navigates to numbered disclaimer}.

6. Repay and reclaim your ETH. When you repay the principal at the end of the term, your Ethereum is returned to you.

An ETH-backed loan can be a sound way to raise cash without selling Ethereum you want to keep, but it adds liquidation risk on top of the price risk you already carry. The borrower who understands where ETH's volatility can take their LTV — and who sizes the loan with that in mind — is the one equipped to decide whether it belongs in their plan.

Yes. Ethereum (ETH) is accepted as collateral for a crypto-backed loan, so you can pledge your ETH, borrow cash against it, and keep ownership. When you repay, your ETH is returned. With Figure, it sits alongside Bitcoin and Solana as eligible collateral.

With Figure, you can borrow up to 75% of your ETH's value (loan-to-value), with a minimum loan of $5,000^{2: Navigates to numbered disclaimer}. A lower LTV means a larger cushion before a price drop puts your loan at risk, while a higher LTV means more cash in hand but less room for ETH to fall. Because the maximum is 75%, you always pledge more ETH value than you borrow.

If ETH falls in value, the same loan becomes a larger share of a smaller collateral pool, so your LTV rises. If it climbs past the liquidation threshold, the lender can sell your ETH to cover the loan. This is the primary risk of borrowing against Ethereum, which is why the size of your starting cushion matters. Figure's optional Liquidation Protection^{4: Navigates to numbered disclaimer} can defer price-based liquidation for the loan term in select states.

Borrowing against your ETH is generally not a taxable event^{3: Navigates to numbered disclaimer}, because you are not selling — you receive loan proceeds and keep your Ethereum. Selling ETH to raise the same cash could trigger capital gains tax on your appreciation.

This is general information, not tax advice; consult a tax professional for your situation.

Your eligibility for a crypto-backed loan is based on your crypto collateral, not entirely on your traditional credit score. We will conduct a soft-credit pull to determine if you are in good standing with other lenders.^{5: Navigates to numbered disclaimer}

Figure's crypto-backed loan carries a fixed interest rate for the one-year term, so your rate does not change with market swings while you hold the loan^{2: Navigates to numbered disclaimer}. An optional Liquidation Protection feature is available in select states for an upfront, non-refundable fee of 2% of the loan amount.^{4: Navigates to numbered disclaimer}

This information is provided for educational and informational purposes only and does not constitute financial, investment, legal, or tax advice, nor does it constitute an offer or commitment to extend credit. Consult a qualified financial advisor, tax professional, or legal counsel regarding your specific situation