Bitcoin Collateral Loans: A New Financing Tool for Russian Businesses

Loans collateralized by cryptocurrencies are gradually becoming a favored financial instrument among Russian businesses, especially those holding large Bitcoin assets. Compared to traditional bank loans, which typically require lengthy due diligence, extensive paperwork, and standard collateral requirements, crypto-backed loans allow companies to quickly unlock liquidity through their existing digital assets.

The core advantage of this model is that it enables financing without the need to sell Bitcoin. Given the high volatility of the crypto market, forced asset liquidation could lead to missed upside opportunities or actual losses. By using BTC as collateral, companies can retain potential gains from future price increases while obtaining ruble-denominated funds for daily operations, equipment purchases, or business expansion.

This financing approach is particularly well-suited for mining companies. Miners need to continuously cover costs such as electricity, infrastructure maintenance, and hardware upgrades, most of which are held in the form of cryptocurrencies. Bitcoin-backed loans allow miners to cover current expenses without selling accumulated assets or deviating from their long-term investment strategies.

Sovcombank Program: Terms and Key Features

Sovcombank (Russia’s Eastern Joint Bank) is one of the first Russian banks to offer Bitcoin-backed loans to corporate clients. This product is aimed at companies and sole proprietors operating under the Russian Federation legal framework. In November 2024, Russia officially recognized industrial-grade cryptocurrency mining, providing a policy foundation for the launch of this project.

The loan is issued in rubles, with a maximum term of up to two years. The interest rate is the Bank of Russia’s benchmark rate plus 7 percentage points, currently approximately 23% annually. To mitigate market volatility risks, the bank applies a 50% discount to the collateral value. In practice, Bitcoin worth 1 million rubles can secure a maximum loan of 500,000 rubles.

The bank emphasizes that this structure allows businesses to obtain financing without liquidating crypto assets during unfavorable market conditions. The product is mainly targeted at companies with substantial BTC reserves seeking to maintain stable capital structures.

Borrower Qualifications and Application Process

Bitcoin-backed loans are available to legal entities and individual entrepreneurs registered and operating in Russia for at least one year. Borrowers must prove that the crypto used as collateral is their legal property, and the use of third-party or unknown-source assets is not permitted.

Applicants are required to submit financial and tax reports for the most recent reporting year to the Federal Tax Service, and must not have overdue loans, taxes, or other payments. The bank will also conduct further reviews of the company’s financial discipline and business reputation.

The loan process includes submitting an application, reviewing relevant documents and financial status, assessing the value of the crypto assets, and determining the available credit limit. Once approved, Bitcoin must be stored throughout in a dedicated custody solution. After signing the loan agreement, funds will be transferred in rubles to the company’s settlement account.

Who Uses Crypto Loans and Future Outlook

In Russia, mining companies remain the primary users of crypto-backed loans, as Bitcoin is both their output and core asset. The legalization of mining has increased industry transparency and simplified cooperation with banks, further boosting demand for crypto collateral financing.

Beyond mining firms, this product is also suitable for large holders who wish to retain Bitcoin exposure while accessing additional liquidity. However, experts note that the ruble-denominated borrowing costs are relatively high, making such loans a niche product in the Russian market. In overseas markets, similar products typically feature significantly lower interest rates.

Nevertheless, crypto-backed loans are seen as an important step in the development of Russia’s crypto financial infrastructure. They offer companies more flexible capital management options, and as the regulatory environment improves and macroeconomic risks decline, they are expected to secure a stable position among diversified financing tools.