You have two bitcoin. You need C$60,000 for a down payment, a renovation, or the tax bill on last year’s gains. Selling means a capital gain now and no coins later. So the question every holder eventually types into a search bar is the one CryptoSlate asked this week: can you borrow against bitcoin without selling it, and what is the catch?
Their piece is about wrapped bitcoin in DeFi, the token-of-a-token route. This one is about the lenders a Canadian can actually sign with in 2026, in dollars, with the tax and regulatory lines that American explainers never mention because they do not apply south of the border. The catch is the same in both worlds, and it is a number: the price at which your bitcoin gets sold whether you wanted to sell or not.
How a bitcoin-backed loan works
The structure is old. You pledge an asset, the lender advances cash against part of its value, you pay interest, and when you repay you get the asset back. A pawn shop does it with a watch; a bank does it with a house. The bitcoin version has four numbers that matter.
Loan-to-value (LTV) is the loan divided by the collateral’s market value. Retail lenders start you at 50 percent or lower. Bitcoin at about C$108,500 on September 9, 2026 means one coin secures a loan of about C$54,250 at 50 percent.
The margin call is the LTV at which the lender tells you to add collateral or pay down the loan. Because the loan is fixed in dollars, LTV rises as bitcoin falls. Ledn sends alerts at 70 and 75 percent; APX Lending issues a margin notice above 80 percent.
The liquidation line is where the lender sells. Ledn liquidates automatically at or above 80 percent; APX at 90 percent; Coinbase, which does not serve Canada, at 86 percent. The arithmetic is simple: the drawdown that triggers a sale equals one minus your starting LTV divided by the liquidation LTV. A 50 percent loan with an 80 percent line survives a 37.5 percent drop and not a dollar more.
Rehypothecation is whether the lender can lend your collateral out to someone else while you owe. It is the reason 2022 went the way it did, and it is the first clause to read.
Who lends to Canadians in 2026
The list is shorter than the ads suggest. Every registered Canadian trading platform gave the Canadian Securities Administrators a written commitment in February 2023 not to offer margin, credit or other forms of leverage to any client, and not to pledge or re-hypothecate client coins. The notice names the reasons: Voyager, Celsius, FTX, BlockFi and Genesis. So Wealthsimple, Coinsquare, Bitbuy, Shakepay and the rest do not lend, and Kraken’s borrowing product lists Canada among the countries it excludes. The big American names are closed too: Coinbase’s loans are for the United States excluding New York, Strike’s require a US address or a US-registered business, and Unchained lends only to US entities from US$150,000.
That leaves four doors.
APX Lending (Vaughan, Ontario) is the only lender operating under a decision from Canadian securities regulators. The regulators’ reasoning deserves a sentence: CSA staff take the view that a lender holding crypto as collateral “may be engaged in activities to which securities legislation applies”, because a borrower’s rights over the collateral may themselves be a security. So on April 1, 2025 the Ontario Securities Commission granted APX Inc. time-limited relief from dealer registration and prospectus requirements for crypto-backed lending, passported to every province and territory, on conditions: individual clients must be Canadian residents, a margin notice above 80 percent LTV and liquidation at 90, thresholds that cannot change once a loan is deployed, no rehypothecation of the collateral, and at least 95 percent of client collateral with an acceptable third-party custodian. Loans are in Canadian or US dollars for three months to five years; APX is not a CIPF member; the decision says it is not a precedent for other lenders and expires after three years. The product, per its loans page: loans from $10,000 in CAD or USDC, 20 to 60 percent LTV, 3 to 60 months, no origination or administration fee, bitcoin or ether as collateral held in BitGo Trust wallets, CAD usually paid within 24 hours. Rates are 11.49 percent under $100,000, 10.99 percent to $1 million, and 9.99 percent above. APX was founded in 2022 by Andrei Poliakov, a co-founder of Coinberry, and its 2025 recap is the most useful disclosure any lender here publishes: in the November 2025 drawdown, 18 percent of its loan book received soft margin calls and 0.93 percent of loans were liquidated, with the book averaging 47 percent LTV.
Netcoins, the Vancouver platform, became in July 2026 the first Canadian exchange to plug into APX’s lending infrastructure. Its lending page quotes rates from 12.99 percent, a $10,000 minimum, terms up to 60 months and BitGo custody. Same engine, a point and a half more for the convenience. Calgary custodian Balance struck a similar arrangement in May 2026 for clients who want the coins to stay in Balance cold storage while they borrow.
Ledn was founded in Toronto in 2018 and is one of the largest consumer bitcoin lenders anywhere: US$1.4 billion originated in 2025, about 30 percent of the consumer market by its own count, US$11.5 billion lifetime, and Tether as a strategic investor since November 2025. Its operating entities are now in the Cayman Islands and its loans are in US dollars, paid out in USD, USDC or local currency. The published terms: 50 percent initial LTV, alerts at 70 and 75 percent, automatic liquidation at or above 80 percent, a US$500 minimum, a 12-month term with no required monthly payments, no early-repayment penalty, and no administration fee for Canadian or US clients. Rates tier by size: 11.49 percent under US$250,000, falling to 9.25 percent above US$2 million. Since July 2025 Ledn lends only against bitcoin and says custodied collateral “may only be re-posted to an institutional USD funding partner” and is “never lent to generate interest”. One line for the east and the prairies: Ledn’s own Canadian guide, updated September 3, 2026, says its dollar loans are not available to residents of Quebec, New Brunswick, Nova Scotia or Saskatchewan.
Secure Digital Markets is the institutional door. SDM Inc., an Ontario corporation trading as Secure Digital Markets in Toronto, has run an OTC desk since 2017 and lists lending beside spot, derivatives and FX. The terms on its lending page are for qualified investors and read like a term loan rather than an app: a US$500,000 minimum, up to 65 percent LTV against any of the top 50 digital assets, 8 percent a year paid quarterly in arrears, a 2 percent arrangement fee, 18 to 48 months, and no prepayment. The margin mechanism is different too. Instead of an LTV threshold, a call is triggered when the collateral has traded below 70 percent of its price at closing for three consecutive business days, and the borrower gets five business days to cure with more collateral, stablecoins or fiat. Two cautions: SDM’s terms assign lending to its US entity, and the live lending page displays only where SDM has confirmed it may be shown, so a Canadian company should ask the desk directly what it can offer and under which entity.
For scale, the whole crypto-collateralised lending market was US$56.16 billion at the end of June 2026 by Galaxy Research’s count, down from a US$78.69 billion peak in September 2025, with US$22.98 billion of it at centralized lenders and Tether alone holding 58.54 percent of that. Galaxy notes that Ledn’s and Coinbase’s books grew through the second quarter while the market shrank. And Canadians are borrowing: the OSC’s 2025 investor survey, fielded from December 2025 to January 2026, found 25 percent of Canadians now own crypto, one in ten used debt to buy it, and 9 percent borrowed the money through the trading platform itself.
What a 30 percent drop does to the loan
Take the one-coin example at C$108,500 and a C$54,250 loan, interest set aside for a moment.
- Bitcoin falls 25 percent to C$81,400. LTV is 66.7 percent. Nothing happens yet at Ledn or APX. At SDM, a 30 percent fall held for three business days is the trigger, so you are close.
- Bitcoin falls 30 percent to C$75,950. LTV is 71.4 percent. Ledn has sent its 70 percent alert and wants bitcoin, a payment, or a refinance. SDM’s call is live with five business days to cure.
- Bitcoin falls 37.5 percent to C$67,800. LTV is 80 percent. Ledn sells. APX sends its margin notice.
- Bitcoin falls 44.4 percent to C$60,300. LTV is 90 percent. APX sells.
Those are not exotic moves. Bitcoin’s 90-day range on September 9, 2026 ran from C$82,224 to C$113,400, a 38 percent swing between July 1 and September 3. A 50 percent loan written at the September high would have been in margin-call territory at the July low.
Three details make the line closer than it looks. Interest accrues into the loan balance at most lenders, so LTV climbs even when the price does not. Ledn’s renewal rule means a 12-month loan sitting above 65 percent LTV at maturity has enough bitcoin sold to bring it to 64 percent before it rolls. And a liquidation does not always clear the debt: Ledn’s risk disclosure says you “remain responsible for any deficiency which exists after the net proceeds of dispositions are credited against any amounts owing”.
Bitcoin price declines can also trigger margin calls, and any resulting liquidations are taxable as well. Strike, on its own lending page, September 2026
The Canadian tax angle
The reason to borrow rather than sell is the Income Tax Act, and it works, with two traps.
The loan is not on the CRA’s list of dispositions. The CRA’s crypto-assets guide says a disposition may occur when you trade or exchange a crypto-asset for government-issued currency or another crypto-asset, use it to buy goods or services, or give it away. Pledging coins as collateral and receiving cash is none of those, and you keep ownership, so no gain is realized when the loan is funded. The guide adds that its list “does not include all situations that result in a disposition”, so read the agreement for the word “title”: a loan that transfers ownership of the coins to the lender is a different animal from a pledge, and the accountant’s answer may change with it. The same page lists financing your purchases “by some form of debt” among the factors that point to business income rather than capital gains, which matters if the loan buys more bitcoin. (This is general information, not tax advice.)
A liquidation is a sale. When the lender sells your collateral at C$67,800 against an adjusted cost base of C$30,000, you have disposed of bitcoin at C$67,800. The capital gain is C$37,800, and since the proposed increase to the inclusion rate was cancelled in March 2025, one-half of it is taxable; the CRA’s capital losses page puts the 2025 inclusion rate at 50 percent. If the price was below your cost base the loss counts, unless you or your spouse buy the same coins back within 30 days before or after the sale and still hold them 30 days later, in which case the superficial loss rule on that page denies it. Paying interest in bitcoin is also a disposition of the bitcoin you pay with, treated by the CRA as a barter transaction, so a loan serviced in coins produces a small taxable event every payment.
Interest is deductible only when the money earns income. Paragraph 20(1)(c) of the Act, explained in the CRA’s interest deductibility folio, allows a deduction for interest on borrowed money used for the purpose of earning income from a business or property. The folio is blunt about the collateral: “the nature of the security provided in connection with borrowed money … has no impact on the tests for interest deductibility. It is the use of borrowed money and the purpose of that use that is relevant.” A down payment, a renovation, a car or a tax bill is personal use, so that interest is not deductible. Borrowing to buy more bitcoin generally fails the test as well, because the folio says the purpose of earning income “does not include a reasonable expectation of capital gains”, and bitcoin held for a gain pays no interest, dividends or rent. Mixed use is apportioned: the folio’s own example is a $100,000 line of credit with $40,000 in income-producing property, of which 40 percent of the interest qualifies. A loan into a business or a dividend-paying portfolio is a different conversation, and one worth having with an accountant before you sign, because the lender’s paperwork will not care what you did with the cash.
Foreign custody may mean Form T1135. The form is required when the cost of your specified foreign property exceeds $100,000 at any time in the year, and the CRA’s list of that property includes “funds or intangible property … situated, deposited or held outside Canada”, whether or not it produces income. The CRA’s web guidance does not name crypto-assets, so the question for your accountant is whether coins held by a foreign custodian or lender are intangible property held outside Canada. Ledn’s lending entity is in the Cayman Islands; APX’s decision names BitGo Trust Company, a US custodian, for cold storage. Ask where the coins physically sit before the year ends, not after.
One more Canadian line, in the borrower’s favour: since January 1, 2025 the criminal rate of interest is any annual percentage rate above 35 percent on the credit advanced, fees included, and the regulations that took effect the same day exempt only commercial loans to a borrower that is not an individual: up to 48 percent between $10,000 and $500,000, and no cap above $500,000. A person borrowing against their own coins is inside the 35 percent line whatever the size. Every lender above is well inside it, and any offer that is not is not a loan you want.
Who holds your coins while you owe
The rate is the easy part of the comparison. The custody clause is the part that decided who got paid in 2022.
Celsius no longer exists, and it did not fail honestly. It filed on July 13, 2022. A year later to the day, the SEC, the CFTC and the FTC all charged the company and its founder, Alex Mashinsky, with fraud: false statements about the business, market manipulation of its own token, and a platform that “falsely touted high profits and security” to pull in deposits. The FTC settlement carried a US$4.7 billion judgment, suspended so the estate could pay creditors, and a permanent ban on Celsius handling anyone’s assets again. Mashinsky pleaded guilty to securities fraud and commodities fraud in December 2024 and was sentenced to 12 years in May 2025. The company’s own site now describes it in the past tense: it “emerged from Chapter 11 bankruptcy on January 31, 2024” and shut its apps on February 29, 2024 “as a part of the winding down of its business operations”. The plan estimated a total recovery of 79.2 percent of claims, paid mostly in bitcoin and ether at January 2024 prices plus shares in a successor mining company. Borrowers got a worse deal than depositors. The estate’s notice to retail borrowers let them repay the loan in full and receive crypto equal to the amount repaid, and added, for the avoidance of doubt, that repaying “will not entitle you to receive the full amount of the collateral supporting the applicable loan”. The over-collateral became an unsecured claim like everyone else’s. BlockFi, which shut its platform for good on May 31, 2024, had an estate that returned 100 percent of claims, but 100 percent of their dollar value on November 28, 2022, not the coins, in a period when bitcoin roughly quadrupled. Voyager, the first name in the CSA’s list of insolvencies, returned 35.72 percent in its initial distribution.
The lenders above answer the custody question differently. APX’s regulatory decision requires at least 95 percent of client collateral with an acceptable third-party custodian and names BitGo Trust Company for cold storage and Fireblocks for hot wallets. Ledn’s lending entity is a registered virtual asset service provider in the Cayman Islands, not a Canadian securities registrant, so a Canadian borrower’s protection there is the contract. Its custodied model re-posts the collateral to an institutional funding partner as security but bars anyone in the chain from lending it out for yield, and it publishes a monthly open-book report with a proof of reserves last attested on September 1, 2026. SDM’s institutional loans move the collateral to a dedicated SDM lending wallet, so the borrower is relying on SDM itself. None of that is CDIC or CIPF coverage, which do not extend to crypto at any Canadian institution. It is a contract, and contracts are only as good as the counterparty on the worst day.
Is it worth it?
A bitcoin-backed loan is a good tool for a specific job: a defined, short-term need for cash, sized so that the liquidation price is far below anything you would expect to see, taken from a lender whose custody terms you have read, with a plan for the margin call before it comes. Borrowing at 30 percent LTV instead of 50 moves the 80 percent liquidation line from a 37.5 percent drop to a 62.5 percent drop, and the interest bill falls with it.
It is a poor tool for living expenses, for anything you cannot repay from income, and for the trade that every bear market punishes: borrowing against bitcoin to buy more bitcoin. That doubles the exposure, makes the interest non-deductible, and turns a 40 percent drawdown into a forced sale at the bottom with a tax bill attached.
Before you sign, check ten things:
- The liquidation LTV and the margin-call LTV, and the price they imply for your loan today.
- Whether interest accrues into the balance or is paid monthly, and in which currency.
- Whether the loan is in Canadian dollars, US dollars or a stablecoin, and who eats the conversion.
- The custody clause: who holds the coins, whether they can be re-pledged, and to whom.
- Whether the lender is under a Canadian regulatory decision, a FINTRAC registration only, or a foreign licence.
- What you can top up with, and how many days you get.
- Origination, administration and liquidation fees, and whether prepayment is allowed.
- What happens at maturity: renewal terms and any automatic sale.
- What the cash is for, and whether that use makes the interest deductible.
- Where the coins will sit on December 31, for the T1135 question.
The coin stays yours through all of it, right up to the day it does not. That is the catch, and it is written in the agreement in plain numbers. Read them before the rate.