English (en)

Bitcoin-backed loans are often discussed in simple terms, but their mechanics are frequently misunderstood. At their core, these loans are a form of collateralized lending where Bitcoin secures access to liquidity. Understanding how do Bitcoin loans work is essential before using Bitcoin as collateral.

A BTC-backed loan begins with collateral. The borrower pledges Bitcoin to secure a loan denominated in fiat currency or stablecoins. The amount that can be borrowed is determined by the Loan-to-Value ratio, commonly referred to as LTV.

LTV represents the relationship between the loan amount and the value of the Bitcoin collateral. For example, a 40% LTV means that for every $100 worth of Bitcoin pledged, $40 can be borrowed. Lower LTVs reduce risk but limit liquidity. Higher LTVs increase liquidity but raise exposure to Bitcoin price volatility.

Bitcoin’s volatility is the defining risk factor of using Bitcoin as collateral for a loan. When Bitcoin’s price declines, the value of the collateral decreases while the loan amount remains constant. As a result, the LTV increases.

To manage this risk, loans backed by Bitcoin  include predefined thresholds. When the LTV rises beyond certain levels, a margin call is triggered. A margin call requires the borrower to either add additional Bitcoin collateral or repay part of the loan to restore a safer LTV.
Margin calls are not liquidations. They are risk management mechanisms designed to protect both borrower and lender. Liquidation occurs only if margin calls are ignored or if market movements are too rapid to manage within predefined buffers.

The borrower continues to pay interest throughout the loan term. Once the loan principal and interest are fully repaid, the Bitcoin collateral is released back to the borrower.

Loans backed by Bitcoin  are not designed for leverage or speculation. Using borrowed funds to increase Bitcoin exposure introduces compounding risk and undermines the purpose of the loan. These loans function best as liquidity tools for expenses, investments, or cash flow management unrelated to Bitcoin price speculation.

Debifi operates a peer-to-peer Bitcoin lending model with an emphasis on transparency and defined rules. Loans are structured conservatively, with clear LTV requirements, collateral terms, and communication around risk thresholds.

Automation can reduce friction, but it can also amplify risk during volatile market conditions. For this reason, Debifi emphasizes manual oversight and clear borrower communication rather than instant, automated liquidation systems.

Borrowers considering loans backed by Bitcoin  must assess their own risk tolerance honestly. Conservative LTVs, sufficient collateral buffers, and a realistic repayment plan are not optional - they are prerequisites.

Bitcoin-backed lending does not eliminate risk. It reallocates it. Instead of market timing risk associated with selling Bitcoin, borrowers take on collateral management risk. Understanding this trade-off is essential.

Used responsibly, Bitcoin collateralized loans  can be a powerful financial tool. Used carelessly, they can amplify downside exposure. Education and discipline determine the outcome.


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How Do Bitcoin-Backed Loans Work: Collateral, LTV, and Risk Explained

In January 2026, the Bitcoin market indicators and Debifi lending metrics reflected the following developments:

As of January 31, 2026, Bitcoin was priced at USD 78,689. During the month, the price fluctuated between a high of USD 77,250 and a low of USD 60,820. The maximum drawdown reached –21.3%. Average daily trading volume ranged between USD 35 and 45 billion, while 30-day Bitcoin volatility stood at approximately 2.15%.

Regarding Debifi’s lending metrics, the average loan-to-value (LTV) ratio was 60%, with an overall LTV range of 50% to 70%. The annual percentage rate (APR) varied between 8.5% and 20%. The average loan size amounted to USD 60,000, and loan durations ranged from 1 to 24 months.

Sources : Debifi open loan offers, Tradingview & BitBo

# January 2026 Overview

January was a month of **recalibration** and stress-testing, both for the global macroeconomic landscape and the Bitcoin-backed lending ecosystem.

Following a period of stability in December, the market entered a sharp corrective phase in late January. This Bitcoin downturn saw volatility double compared to the previous month's average, yet market liquidity remained remarkably robust. This price action was largely driven by a high correlation with the global market; as equity markets faltered, institutional algorithms triggered mechanical sell orders to mitigate Value at Risk (VaR). This automated liquidation by institutional funds occurred independently of Bitcoin’s strong underlying fundamentals.

This dynamic didn’t influence Debifi’s lending activity. Despite elevated market volatility and a sharp drawdown, **the platform continues to see new contracts being confirmed**, increased interest from institutional Lenders and Borrowers, and loans remained conservatively collateralized with stable loan-to-value ratios (average of 60%). This outcome highlights Bitcoin’s unique capacity to absorb price shocks while remaining usable as reliable collateral, as well as the effectiveness of Debifi’s disciplined four steps margin call framework.

As the Loan-to-Value (LTV) ratio approaches the threshold of 75%, the platform automatically triggers notifications via the mobile app and email, advising the borrower to either [top up their collateral or partially repay the loan](/blog/en/smart-loan-management). This proactive approach is essential as it empowers users to manage their risk in real-time, preventing unexpected liquidations during periods of high volatility.

Despite the month’s volatility, January’s conclusion remains positive. Bitcoin’s ability to function as robust collateral under pressure confirms the strength of this asset class. At Debifi, we are entering 2026 with a clear focus: scaling our platform while upholding the highest standards of transparency. Through our MultiSig architecture and sound risk management, we continue to offer a sanctuary for those seeking to leverage their Bitcoin without compromising on security.


Debifi monthly newsletter for January 2026

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Debifi & Bitcoin Snapshot for January 2026

For many Bitcoin holders, the need for liquidity does not come from speculation or lifestyle inflation. It comes from practical realities: taxes, business expenses, investment opportunities, or temporary cash flow gaps. When this moment arrives, the most common reaction is also the simplest one - sell Bitcoin.

Selling Bitcoin feels intuitive. It converts a digital asset into spendable currency quickly and with minimal friction. But what feels simple in the short term often turns out to be expensive in the long term.

The first cost of selling Bitcoin is taxation. In most jurisdictions, selling Bitcoin triggers a taxable event. Capital gains taxes reduce the net amount of liquidity received and permanently lower the Bitcoin position. Even in regions with favorable tax treatment, selling creates reporting obligations and strategic complexity that many holders underestimate.

The second cost is opportunity cost. Bitcoin is a scarce asset with a fixed supply and no dilution mechanism. Selling Bitcoin removes exposure to its future upside. This is not a theoretical concern. Many long-term holders have experienced the regret of selling Bitcoin to solve a short-term problem, only to watch its value increase significantly later. Rebuying Bitcoin often happens at higher prices, turning a temporary liquidity need into a permanent loss of Bitcoin ownership.

The third cost is irreversibility. Liquidity needs are usually temporary. Selling Bitcoin is permanent. Once Bitcoin is sold, the position is gone. The decision cannot be undone without re-entering the market under new conditions.

These three factors - taxation, opportunity cost, and irreversibility - make selling Bitcoin a structurally inefficient solution for many liquidity needs.

This does not mean selling Bitcoin is always wrong. There are scenarios where reducing exposure is intentional and appropriate. However, selling should be a deliberate portfolio decision, not a default response to short-term liquidity pressure.

An alternative approach is to borrow against Bitcoin.

Bitcoin-backed loans allow holders to use Bitcoin as collateral to access liquidity while maintaining ownership and economic exposure. Instead of selling the asset, Bitcoin is temporarily pledged under clearly defined terms. Once the loan is repaid, the Bitcoin is released back to the borrower.

This structure aligns better with the long-term conviction many Bitcoin holders have. It recognizes that liquidity needs often exist alongside a desire to maintain Bitcoin exposure.
However, there are risks of borrowing against Bitcoin. . Bitcoin’s volatility introduces collateral risk. Poorly structured loans, excessive leverage, or a lack of risk management can lead to margin calls or [liquidation](https://debifi.com/blog/en/forced-liquidation).

For this reason, Bitcoin-backed lending should not be viewed as a shortcut or a speculative tool. It is a financial instrument that requires discipline, conservative assumptions, and a clear repayment strategy.

At Debifi, Bitcoin-backed lending is positioned as a pragmatic liquidity solution for responsible Bitcoin holders. The goal is not to maximize leverage or chase yield, but to provide structured access to liquidity without forcing unnecessary Bitcoin sales.
Selling Bitcoin may solve a problem today. Loans against Bitcoin, when used conservatively, can solve the same problem without permanently reducing long-term exposure. Understanding this distinction is the first step toward more efficient financial decisions with Bitcoin.


Loans against Bitcoin as alternative to selling BTC

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Why Selling Bitcoin Is Often the Worst Way to Access Liquidity

In 2025 we moved beyond initial tests, released new products, met the Bitcoin community around the world, and continued building tools that let people use Bitcoin without selling it. Below, we recap the key moments that defined 2025 for Debifi and the broader Bitcoin ecosystem.

2025 was an important milestone for Debifi. This year [Debifi exited the beta stage](/blog/en/debifi-exits-beta) and launched officially into full production. Debifi moved from a promising concept to a fully-fledged platform shaping the future of Bitcoin-backed finance.

In 2025, Debifi was recognized by [Zone21.com](https://www.zone21.com/), a crew of Bitcoiners building for other Bitcoiners, as **one of the safest Bitcoin-backed lending platforms in the world**, **ranking second** for security, transparency, and protection of user funds. This confirms that Debifi’s non-custodial, multisig escrow approach keeps Bitcoin safe and fully under user control.

## New partnerships

We are glad to mention the strategic partnership with [Berglinde](https://cryptodaily.co.uk/2025/01/debifi-and-berglinde-join-forces-to-redefine-bitcoin-backed-fiat-lending-with-loans-in-usd-eur-and-chf), a Swiss firm known for combining Bitcoin and traditional finance. Together, we offer fiat loans in USD, EUR, and CHF, opening up more financial options for users who want to access cash without selling their Bitcoin.

Debifi continued improving security for its users. One of those steps is the [partnership with Sygnum to deliver MultiSYG](/blog/en/sygnum-debifi-combine-bitcoin-multi-sig-technology), an innovative Bitcoin-native multi-signature lending solution from a regulated bank, which is expected to launch in early 2026.

## Meeting the Community

This year, Debifi spent more time meeting  partners, borrowers and lenders in person at conferences organized by the Bitcoin community. For us, these events were about conversations, feedback, and learning how Bitcoin is actually being used.

We participated in the following conferences and events:
- Bitcoin Investor Week New York
- Imagine IF Nashville
- Custody and Treasury Summit Nashville
- Plan B El Salvador
- Free Energy Summit Lisbon
- [Plan B Forum Lugano](/blog/en/max-kei-planb-forum-lugano-bitcoin-banking-2025)
- BTC Prague

 Moreover, Debifi was a main [sponsor of the Baltic Honeybadger 2025 edition](/blog/en/debifi-baltic-honeybadger-main-sponsor), showing our support for the part of the community that believes in Bitcoin as sovereign, secure, and non-negotiable.
 
We shared our vision publicly across key global events, contributing to the broader conversation about Bitcoin’s role in finance.

## Product Progress Throughout the Year

This year Debifi has also introduced the [Bitcoin-backed digital cards](/bitcoin-card) that gives users the possibility to get instant liquidity in just a few steps without selling Bitcoin. The card is designed to connect Bitcoin with real-world payments, including [everyday expenses](/blog/en/use-bitcoin-card-in-daily-life) while keeping the same core principles Debifi is built on: security, transparency, and control.

2025 also brought steady improvements and new options on the platform, including:

- [longer-term Bitcoin loans](/blog/en/debifi-24-month-btc-loans) (now up to 24 months!) 
- improved loan management tools
- continued work on usability and transparency

We continuously worked on improving our Debifi app for Android and making it simpler, faster, more convenient, and easier to use.

We also invested heavily in the **Debifi iOS app**. Over the year, it received multiple functional updates and has now become a _fully independent application_, working separately from the website. This means users no longer need a PC or laptop to manage loans — everything can be done directly from an iOS device, anytime and anywhere.

One of the key updates was the [introduction of a **new Dashboard**](/blog/en/dashboard-notifications). It gives lenders a clearer overview of active loans and makes managing their lending easier and more intuitive, all in one place. Borrowers can now clearly see their total borrowed amount, accrued interest, upcoming payments, and the amount of BTC securing each loan. This makes loan management more transparent and helps borrowers stay in control of their positions.

 We also expanded blockchain support. In addition to Tron, Liquid, and Ethereum, Debifi now supports the Solana network — giving users more flexibility when choosing where to operate.
 
In addition to big releases, we spent the year improving Debifi step by step. Over the course of the year, we introduced and improved several key features, including:
- сustom identity verification (KYC) integration
- added support for attachments so borrowers and lenders can upload documents
- unified notifications across web and mobile with push alerts in the app
- reworked Transaction Confirmation UI
- rolled out hardware-only offers
- added TAPSIGNER support on iOS

We have shared more detailed product updates separately, but the goal stayed the same all year: make Bitcoin-backed lending easier to understand and easier to use.

By the end of 2025, Debifi had grown into a stable platform with real users, real volume, and real products.

The focus going forward stays simple: help people **use Bitcoin without selling it**.

Thanks to everyone who used Debifi, gave feedback, or met us in person this year. We’re building this together — step by step.


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Debifi in 2025: A year of growth

Bitcoin is more than just a digital asset — for many, it’s a long-term investment. But what if you need money right now? For a trip, a new laptop because your old one died, the newly launched iPhone or everyday expenses? Going to a bank is painful and long waiting process. Borrow from other people could lead to complicated situations at some point. Selling BTC is not always the best choice, especially when the market may be on the rise.

That’s where the [Bitcoin Card](/bitcoin-card) powered by Debifi comes in. It’s a **digital prepaid Visa card** backed by your Bitcoin as collateral. You don’t sell your BTC — you simply use its value to unlock a spending limit.

Let’s see real-life examples of how the card works and how it helps you stay invested while still covering your needs.

## Book your flights and hotels without selling BTC

You’ve found great flight deals or the perfect hotel — but the crypto market looks promising: Selling Bitcoin right now feels like missing out.

With the Bitcoin backed digital prepaid Visa card, you can avoid it. It lets you keep your Bitcoin and still book your trip. Here is how it works:

1. Use your BTC as collateral to receive a spending limit on the card.
2. Pay for flights, hotels, rentals, or tours directly with the card.
3. Repay the balance later when it’s convenient for you.

Your Bitcoin stays under your control, while sticking to your travel plans. You decide when and where to go without selling your crypto.

## Buy tech today and keep your BTC for the future
Need a new laptop, smartphone, monitor, or home office setup?
Large purchases often come at the wrong time — especially when BTC might go up. And you don’t want to miss the next potential move upward.

Debifi offers an easy possibility to buy the things at the moment you need.

The digital prepaid visa card powered by Debifi makes this simple: You just use your BTC as collateral and get an instant spending limit on the card for any tech purchase you want. You pay in-store or online with the card. All this time your Bitcoin stays safely locked in a non-custodial, 2-of-3-multisig escrow — you keep ownership, and Debifi provides the spending limit.

You get the tech you need now without touching your investment.
Moreover, you can repay your loan whenever you want without any fines.

## Spend every day with no need to cash out
Life is full of small but constant expenses: groceries, gas, subscriptions, online shopping, household items, medicines.

You _could_ convert some Bitcoin every time you need cash — but that means selling your assets piece by piece and losing future potential gains.

The [Bitcoin card](/bitcoin-card) is a digital prepaid Visa card. You can add it to your “digital” wallet on the phone and use it to pay for your daily expenses anywhere Visa is accepted.
The card works perfectly for daily use, so you can:
- Pay in grocery stores and retail shops
- Grab coffee on the go
- Easily pay in cafes and restaurants
- Pay for monthly subscriptions (like Netflix, Spotify, etc.)
- Order from Amazon
- Pay for the gym membership etc.

There’s no need to sell or convert your BTC.
 Just use your card like any other payment card — but backed by your BTC.

<hr>

**The most important thing about the digital prepaid Visa card is that you don’t need to sell Bitcoin when you can use it as collateral.**

This is the main advantage of using a digital prepaid Visa card by Debifi: You keep ownership of your Bitcoin. You simply use its value to cover your everyday expenses.

Debifi’s non-custodial, multisig-secured model keeps your BTC under your control while giving you instant access to funds. Check the details here: [Card offers](/offers?payment_method=product)

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How to use the Bitcoin card by Debifi in daily life

To ensure your Bitcoin-backed loan stays secure and you avoid the process of forced liquidation, it’s important to understand what does forced liquidation mean, how does liquidation work and to know the steps you can take to prevent it. Here's what you need to know about forced liquidation and how to protect yourself.

## What is forced liquidation?

Forced liquidation happens when your **LTV ratio** (Loan-to-Value ratio) **rises above 90%** and you don’t take action to fix it. This usually occurs when Bitcoin’s price drops, your collateral loses value, and your loan becomes too risky. The Borrower should either increase the amount of collateral or partially repay the debt to keep the LTV ratio at an appropriate level, between 30 and 70%.

Before a forced liquidation starts, the Borrower will get **three margin call notifications**. What is a margin call? A margin call means a note of warning that your collateral value has fallen below the required level according to your contract.

If you don’t respond and your LTV goes higher than 90%, Debifi notifies both the Borrower and the Lender as well as the Authorized Key Holder that the forced liquidation process has started. You can’t take any actions if the forced liquidation process has started.

The contract is then closed, and the collateral is transferred to the Lender.
 
Forced liquidation can also occur **if the Borrower doesn’t repay the loan**. After the contract ends, the Borrower has 24 hours to repay the debt. If they don’t do it, forced liquidation begins and the collateral will be liquidated in favor of the Lender.
The collateral will be liquidated based on the exchange rate of bitcoin to USD at the time of liquidation.
 
## Important things to know about forced liquidation

_**For Lenders:**_

·        Even in forced liquidation, your interest is safe. There is no risk of losing your interest — all loans on Debifi are over-collateralized.

·        After liquidation of the contract, you receive the loan amount + interest in bitcoin. Since it is a volatile asset, lenders choose to monitor bitcoin price closely and hedge their risks by converting the bitcoin into fiat or stablecoins in a timely manner.
 
_**For Borrowers:**_

·        Be aware that forced liquidation includes a 5% liquidation fee. It is calculated from the outstanding debt at the time of liquidation (remaining loan amount + accrued interest).

·        If the collateral amount in the multisig escrow exceeds your outstanding debt, the difference is refunded to you.
 
<h2>How to avoid forced liquidation – our tips</h2>

**1. Choose a low LTV ratio**

Your LTV ratio shows how your loan compares to your collateral value. If BTC price drops then your LTV rises and therefore you may need to add collateral.

At the moment of signing the contract take into consideration:

Higher LTV = higher risk of contract liquidation.

Lower LTV = more protection but also more collateral.
 
**2. Add extra BTC to escrow**

Even if your loan starts at, say, 70% LTV, you can always deposit more collateral to protect yourself.

Adding more BTC to the multisig escrow gives you more time to react if the Bitcoin price goes down.
 
**3. Monitor the Bitcoin price**

If Bitcoin starts falling, log in to the Debifi account and check the current LTV of your contract.

A quick adjustment can fully prevent liquidation.
 
**4. Use a valid email address**

Debifi sends all notifications, including margin calls, to your email.

Make sure you have access to it. Always use a valid email to create an account on Debifi.
 
**5. Repay the debt on time (or earlier)**

Don’t wait until the last minute. You can close your loan early anytime without extra fees.
 
**6. Act immediately when you receive a margin call**

A Margin call means that your LTV ratio is too high.

Fix it by:

·        adding more collateral

·        partially repaying your loan.

Forced Liquidation is easy to avoid when you stay ahead of your LTV ratio.

Monitor your loan, react to notifications, and let your BTC keep working for you — without selling it.



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How to avoid Forced Liquidation

- First bank globally to seamlessly combine Bitcoin-native multi-signature wallets with bank-grade lending services  
- Partnership with Debifi addresses growing institutional demand for self-sovereign Bitcoin lending solutions as traditional finance’s embrace of Bitcoin collateral accelerates  
- New product is latest Bitcoin@Sygnum initiative to advance regulated Bitcoin products, technology integrations and research  
- Announcement made on the first anniversary of Sygnum opening its Lugano office, and on first day of Switzerland’s premier Bitcoin event, the Plan B Forum  

---
## Introducing MultiSYG: Bitcoin Multi-Sig Lending by a Regulated Bank
Zurich, 24 October, 8:00 AM CET — **[Sygnum](https://www.sygnum.com)**, a global digital asset banking group, announces its partnership with **Debifi**, a Bitcoin-backed non-custodial lending platform, to develop **MultiSYG**, an innovative Bitcoin-native multi-signature lending solution. The product, set to launch in H1 2026, is the first multi-signature Bitcoin lending solution from a regulated bank. MultiSYG empowers borrowers to maintain shared control of their collateral through distributed key management rather than via a single custodian. At the same time, they also benefit from the competitive rates, flexible drawdown schedule, loan durations – and white-glove service – of a regulated bank.  

MultiSYG enables Sygnum clients to draw fiat loans against their Bitcoin collateral held in a 3-out-of-5 multi-signature escrow wallet. Distributed control requires multiple private keys to authorise transactions, enabling Bitcoin holders to maintain visibility of their collateral on-chain. This is in line with the fundamental principle of "not your keys, not your coins" that resonates strongly within the Bitcoin community.  

> "A Bitcoin loan should not require blind trust in a custodian," says **Max Kei**, CEO and Founder of Debifi. "MultiSYG's 3-out-of-5 key structure means borrowers can verify their collateral on-chain, while continuing to benefit from Sygnum’s banking relationship and service. After facilitating millions in non-custodial loans, we know this is what the market has been waiting for."  

> “With MultiSYG, we are bringing Bitcoin-native technology to regulated bank lending" says **Pascal Eberle**, Bitcoin@Sygnum and MultiSYG initiative lead at Sygnum Bank. "Borrowers can benefit from bank-grade terms in pricing, drawdown flexibility, and loan duration, while keeping cryptographic proof of their holdings and partial control of their Bitcoin via multi-signature technology. MultiSYG combines the best of both worlds—the ability to hold your own keys while accessing regulated banking products and white-glove service.”  

While other banks require full custody for Bitcoin-backed loans, MultiSYG's distributed key management means clients retain verifiable control of their collateral throughout the loan term – a growing demand from Bitcoin investors. MultiSYG provides a cryptographic guarantee that assets are not rehypothecated, a practice common at traditional banks and other lending services providers.  

This positions Sygnum as the only regulated bank globally offering Bitcoin lending that aligns with the self-sovereignty principles driving institutional Bitcoin adoption. This is a critical differentiator as more companies add Bitcoin to their balance sheets. MultiSYG will complement Sygnum's existing Credit & Lending portfolio and will be available to all Sygnum Bank customers, irrespective of the client’s jurisdiction, upon launch in H1 2026.  

---


### About Sygnum  
Sygnum is a global digital asset banking group, founded on Swiss and Singapore heritage. We empower professional and institutional investors, banks, corporates and DLT foundations to invest in digital assets with complete trust. Our team enables this through our institutional-grade security, expert personal service and portfolio of regulated digital asset banking, asset management, tokenization and B2B services.  

In Switzerland, Sygnum holds a banking license and has CMS and Major Payment Institution licences in Singapore. The group is also regulated in the established global financial hubs of Abu Dhabi, Luxembourg and is registered in Liechtenstein.  

We believe that the future has heritage. Our crypto-native team of banking, investment and digital asset technology professionals are building a trusted gateway between the traditional and digital asset economies that we call Future Finance. To learn more about how Sygnum’s mission and values are shaping this digital asset ecosystem, please visit [sygnum.com](https://sygnum.com) and follow us on LinkedIn and X.  

**Media contact**  
Dominic Castley, Chief Marketing Officer  
dominic.castley@sygnum.com  

Sygnum Bank AG  
Uetlibergstrasse 134a  
8045 Zurich, Switzerland  

---

### About Debifi  
Debifi is the premier platform for non-custodial Bitcoin-backed lending enabling institutions and individuals to leverage their Bitcoin holdings as collateral while maintaining full control of their keys.  

The platform's multi-signature escrow technology and strict no-rehypothecation policy ensure client assets remain secure and verifiable at all times, with security validated through multiple independent audits.  

Debifi's mission is to accelerate financial freedom through non-custodial, Bitcoin-backed lending solutions that provide institutional-grade liquidity, positioning Bitcoin as the premier collateral asset in global credit markets. For more information, visit [debifi.com](https://debifi.com) and follow us on [X](https://x.com/debificom) and [LinkedIn](https://www.linkedin.com/company/debifi/).  



Sygnum and Debifi  Combine Bitcoin Multi-Sig   Technology with Regulated  Bank Lending Services 

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Sygnum and Debifi Combine Bitcoin Multi-Sig with Bank Lending

BTC Sessions  released a detailed tutorial showing exactly how to use [Debifi ](https://debifi.com/)to get a Bitcoin-backed [loan](https://debifi.com/offers) He walks through every step, from setting up your collateral to repaying the loan and getting your bitcoin back.

The video demonstrates how Debifi lets you borrow against your bitcoin without handing over custody. Every loan is secured by a 3-of-4 multisignature escrow, which means your BTC stays locked on-chain where you can verify it throughout the entire loan period.

## What Makes Debifi Different

Most traditional lending platforms re-lend your collateral or hide it behind unclear custody arrangements. Debifi does the opposite:

* **Non-custodial by design.** Your bitcoin stays in a verifiable multisig where you hold one of the keys.
* **No rehypothecation.** Your collateral cannot be re-used or lent out to anyone else.
* **On-chain transparency.** Every contract, deposit, and repayment is visible and verifiable on the blockchain.
* **Institutional liquidity.** Loans are matched with professional lenders using fully collateralized bitcoin escrows.

## Inside the Tutorial

BTC Sessions covers the complete borrowing process from start to finish:

1. Setting up a Debifi account and securing it with PIN and 2FA
2. Creating a loan contract and verifying the escrow on-chain
3. Receiving USD-denominated stablecoins (Liquid USDT)
4. Making repayments and automatically reclaiming your bitcoin collateral

**"The way Debifi's multisig is structured aligns incentives perfectly. Neither party wants the collateral moved. It's designed for transparency and peace of mind."** - BTC Sessions

Watch the full tutorial below to see how to get, repay, and reclaim your bitcoin-backed loan with Debifi, step by step.
[![HOW TO GET A BITCOIN-BACKED LOAN WITH DEBIFI: FULL WALKTHROUGH BY BTC SESSIONS](https://zr5pqljgeynt.compat.objectstorage.eu-zurich-1.oraclecloud.com/blog-production-mainnet/Image_22_10_2025_at_13_12_a8d41dc303.jpeg)](https://www.youtube.com/watch?v=KIBBtH-y-lg)


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How to Get a Bitcoin-Backed Loan with Debifi: Guide by BTC Sessions

Debifi CEO Max Kei will speak at [PlanB Forum in Lugano](https://planb.lugano.ch/planb-forum/) on October 24-25, joining Pascal Eberle from [Sygnum Bank](https://www.sygnum.com) for "Building 21st Century Banking: Better, Bolder, Bitcoin" at 5:30 PM on the 24th. The panel asks a question Kei has spent seven years answering in code: what does banking look like when you start with Bitcoin's security model instead of retrofitting it onto legacy finance?

## From Private Banking to Bitcoin Infrastructure

Kei's path gives him a particular lens on this conversation. After ten years managing client assets in traditional finance, he left banking in late 2015 after a client demonstrated a $15,000 cross-border bitcoin transaction that took seconds. What seemed insane initially became obvious after research—Bitcoin wasn't just different money, it was different infrastructure.

By 2017, Kei was building in the Bitcoin space. He's since survived multiple bear markets while developing noncustodial peer-to-peer bitcoin-backed lending infrastructure, earning endorsements from Preston Pysh (now a Strategic Advisor to Debifi) and cypherpunk Adam Back. When financial institutions started seeking bitcoin-backed lending solutions, Kei recognized they needed purpose-built infrastructure. Debifi launched in March 2024 as that solution.

## Why 3-of-4 Multisig Changes the Security Model

Debifi's core differentiator is its 3-of-4 multisig setup. Most platforms use 2-of-3 multisig: borrower, lender, and platform each hold one key, requiring two signatures to move bitcoin. Debifi adds a fourth key held by an independent institution. Three signatures are still required for any transaction, but now an attacker would need to compromise three separate entities instead of two.

The borrower's key lives on their mobile device—Debifi supports hardware wallets. The lender holds their key. Debifi and the independent institution hold the remaining two. No single party can move the bitcoin unilaterally.

## Why Noncustodial Architecture Matters

The collateral stays in a multisig escrow address throughout the loan lifecycle—verifiable on-chain, enforced by Bitcoin's scripting capabilities, not by legal agreements or trust. Kei's team surveyed 300 bitcoiners: custodial loans at 8% or noncustodial at 11-12%? 91% chose noncustodial despite higher rates.

That preference reflects learned experience. BlockFi, Celsius, and Voyager all filed for bankruptcy in 2022, locking up billions in customer bitcoin. Debifi's architecture makes those failure modes impossible—not because the team is more trustworthy, but because the bitcoin never leaves cryptographic control. The security model doesn't depend on Debifi being honest. It depends on three-of-four signatures and Bitcoin's native scripting.

## Building Infrastructure for Institutional Bitcoin Lending

Kei now believes banks won't disappear in a Bitcoin future—they'll become infrastructure providers. Debifi operates as exactly that: infrastructure connecting lenders with borrowers seeking bitcoin-backed loans while maintaining noncustodial security.

The platform handles key management, dispute resolution, and loan coordination while keeping bitcoin under cryptographic control rather than custodial control.

## The Question for Lugano

The "Building 21st Century Banking" panel happens at **5:30 PM on October 24th at PlanB Forum**—fitting location given Lugano's positioning as Europe's Bitcoin hub through the Plan B initiative. Kei will be discussing infrastructure his team has built and battle-tested through bear markets. Debifi's noncustodial model proves institutional bitcoin lending works without custodial risk. The industry's choice: build on Bitcoin's security guarantees or repeat 2022's failures.
Event details: https://planb.lugano.ch/planb-forum/

Photos of Max Kei and Pascal Eberle as cover image

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Max Kei Speaking at PlanB Forum Lugano


Most[ Bitcoin lending ](https://debifi.com)platforms will tell you they're "non-custodial." Then you read the fine print and discover your coins are pooled in some shared wallet, accessible whenever the company feels like moving things around.  

That's not how we built Debifi.  

Every loan on our platform gets its own dedicated multisig escrow. Your Bitcoin doesn't sit in a pool - it's locked in a unique address that requires multiple independent signatures to move. Not just ours. Not just yours. Multiple parties, with the rules enforced at the protocol level.  

Here's exactly how it works.  

## One Contract, One Escrow Address. Always.

<p align="center">
  <img src="https://zr5pqljgeynt.compat.objectstorage.eu-zurich-1.oraclecloud.com/blog-production-mainnet/One_Contract_One_Escrow_Address_Always_40c90f642b.png" alt="One Contract, One Escrow Address. Always." width="700"/>
</p>

When you initiate the loan, we generate a P2SH multisignature Bitcoin address specifically for that contract by using 4 different public keys. Think of it as a vault that needs three out of four keys to open.  

**Who holds those keys?**
- You (the borrower)  
- Your lender  
- Debifi (for arbitration only)  
- An independent Authorized Key Holder (the failsafe)  

You deposit Bitcoin directly to that address. Once two on-chain confirmations come through - roughly 20 minutes - your collateral locks in for the full loan term. That's it.  

Here's the critical part: nobody can touch those funds alone. You can't. We can't. Nobody can. Any transaction from that address needs three signatures out of four.  
That's not a policy - it's cryptographically enforced by Bitcoin's script.  

We don't hold your funds. Never have, never will. We keep one key solely for arbitration, and that key is useless without two others agreeing to sign. Your Bitcoin stays verifiable and auditable on-chain, controlled by independent parties who each have their own interests to protect.  

## Why 3-of-4 Instead of 2-of-2?

Good question. A 2-of-2 multisig sounds secure until someone loses their key or disappears. Now you've got funds locked forever with no recovery path.  

A 2-of-3 setup is better, but if the platform holds one key, you're back to trusting them not to collude with one other party. Not great.  

Our 3-of-4 structure solves this. Even if one keyholder vanishes - lost phone, forgotten password, goes off-grid for months - the remaining three can still execute the contract according to protocol rules. You get redundancy without creating a single point of control.  

That fourth key, held by an independent Authorized Key Holder, handles specific scenarios: dispute resolution or contractually triggered liquidations. It's not a backdoor. It's a tiebreaker that keeps the system functional without giving any single entity unilateral power.  

Explicit participants. Explicit thresholds. Verifiable outcomes. That's what trust-minimized lending looks like.  

## No Rehypothecation. Ever.

<p align="center">
  <img src="https://zr5pqljgeynt.compat.objectstorage.eu-zurich-1.oraclecloud.com/blog-production-mainnet/No_Rehypothecation_76b7274e66.png" alt="No Rehypothecation" width="700"/>
</p>

Let's be direct: some platforms take your collateral and quietly lend it out again. They call it "capital efficiency." We call it rehypothecation, and we don't do it.  

Your Bitcoin stays in its unique on-chain escrow until the loan's fully repaid. There's no pooling. No reinvestment. No creative reuse of collateral.  

The lender only transfers funds after they've confirmed your collateral is locked in the multisig. Everything's transparent and observable on the blockchain - no intermediaries skimming value or playing games with your coins behind the scenes.  

## Transparency You Can Actually Verify
<p align="center">
  <img src="https://zr5pqljgeynt.compat.objectstorage.eu-zurich-1.oraclecloud.com/blog-production-mainnet/Transparency_You_Can_Actually_Verify_05c5f41cca.png" alt="No Rehypothecation" width="700"/>
</p>

We design for verification, not blind trust. Here's how:  

- **On-chain visibility:** Every contract has its own multisig address. You can track your collateral on any block explorer, anytime. If it's moving, you'll see three signatures on-chain authorizing it.  
- **Two confirmations required:** We don't advance the contract workflow until your deposit has two blockchain confirmations. That's roughly 20 minutes, ensuring transaction finality before anything happens.  
- **Client-side key control:** You generate and store your keys using the Debifi Mobile App on a separate linked device. Your keys never touch our servers. Each signing request requires PIN authentication, 2FA, and device verification - so even if someone compromises your dashboard account, they can't sign transactions without physical access to your device.  
- **Hardware wallet support:** We support hardware wallets that give users full control over key generation and storage.  
- **Open-source code:** We're releasing the Debifi App under an open-source license. Anyone can inspect, verify, and audit our security model. Don't trust us - verify the code yourself.  
- **Real-time alerts:** Margin calls, LTV updates, and liquidation warnings hit your dashboard, mobile app, and email instantly. You're never flying blind.  

This isn't security theater. It's an auditable system where you can verify every claim we make.  

## What Happens When Markets Go Haywire?

Security isn't just about custody - it's about how the system behaves when Bitcoin drops 20% in a day.  

Our risk engine follows predictable, rule-based responses. No discretion, no exceptions:  

- **Over-collateralization from day one:** All loans start over-collateralized, so you've got breathing room when markets swing.  
- **Three-tier margin call ladder:** We send alerts at 75%, 80%, and 85% LTV. That's three chances to add collateral, partially or fully repay your loan without any fees, before anything drastic happens.  
- **Automatic liquidation at 90% LTV:** If your position hits 90%, the contract automatically triggers Forced Liquidation. Your collateral gets liquidated according to the terms you agreed to, and any remaining Bitcoin comes back to you.  
- **24-hour grace period at maturity:** If you don't repay on time, you get a 24-hour window before automatic settlement kicks in. This prevents collateral from being liquidated because you missed a notification.  
- **Bounded arbitration:** In rare disputes, our resolution protocol - executed with the Authorized Key Holder - ensures fairness without compromising the multisig structure. Nobody, including us, can override the 3-of-4 quorum requirement.  

Even under extreme conditions, your Bitcoin stays locked, auditable, and recoverable within a transparent, rule-based framework. No black boxes. No surprises.  

## The Bottom Line

**SECURITY ISN'T A FEATURE WE BOLTED ON - IT'S THE FOUNDATION OF EVERY TRANSACTION ON DEBIFI.**  

Your Bitcoin stays in non-custodial multisig escrow. Movement requires consensus from independent parties. Collateral never gets rehypothecated. Everything's verifiable on-chain.  

If you're tired of platforms that ask you to trust them, this is the alternative: cryptographic guarantees enforced by Bitcoin itself.


Illustration of private keys and self-custody concept emphasizing ‘your keys, your Bitcoin’ principle

Debifi Blog