If you are looking for a loan and are involved with crypto currencies, you might have come across a company called Nexo.io. They have revolutionized a piece of the financial industry by being the first to offer crypto-backed loans.

What does it look like to use your crypto to back your loans?

• Borrow cash or stable coins starting from 6.9% APR.
• No origination fees.
• No monthly payments.
• Automatic approval. if you meet the criteria.
• No credit checks.

What is Nexo?

Nexo is the world’s first instant crypto-backed loan, enabling crypto currency holders to leverage their holdings as collateral for cash loans. Nexo services are entirely online and accessible anyone in the United States. The company was founded in 2017 with the goal of providing fiat loans backed by crypto currency to individuals without credit.

What Does it Mean to Be Backed by Crypto?

Nexo operates in a world of crypto currency investors. In a world when many people are already buying and holding onto crypto currency, Nexo allows you to use your crypto as collateral to borrow fiat money (eg. USD, EUR, etc.) without forcing you to sell your crypto.

That way, you can continue to be a crypto investor as your crypto continue to rise in value, while still being able to borrow low-interest loans. From a traditional point of view, this is similar to using your home as collateral for a bank loan. However, unlike your home, using crypto currency as collateral is much easier since you (and the bank) always know exactly how much your collateral is worth and it can be exchanged; so the loan process becomes a lot simpler.

Nexo Loans vs. Conventional Loans

Nexo Doesn’t Look at Credit Scores

With conventional loans, wealthier clients that have great credit history tend to receive the most cost-efficient loans. Meanwhile, those that do not have that history tend to pay more for simple credit.

Nexo eliminates the use of credit scores in its loan approval process.

They accomplish this with collateralized lending. Since you are parking your cryptocurrency as collateral for the loan, the company can compensate for any loss by selling your collateralized crypto. There is no need to question creditworthiness.

Interest Accrues Only on What You Use

There are huge differences between Conventional Loans and Nexo.io Loans, which they call Instance Crypto Credit Lines. With loans, a client takes out a given sum and immediately begins accruing interest. The Instant Crypto Credit Lines™ allow you to withdraw as much or as little as you want, whenever you want. Additionally, you are only charged interest on the sum you withdraw, giving you greater flexibility to manage your credit as you go and pay as little or as much interest as you want.

No Payment Installment Schedule

In traditional loans, you are obligated to pay monthly installments and must return the loan by a certain date in the future, leaving you to accrue interest at a predetermined rate.

Traditional banks frequently impose early repayment fees, which essentially pushes you to commit to paying more in total for the loan. Nexo has a different policy; The Instant Crypto Credit Lines cancels all monthly installments, deadlines, and (after 30 days) any early repayment penalties so you may borrow and repay at your leisure.

How do Nexo Loans Work?

Nexo offers clients unsecured personal or business loans in either USD or EUR currency. The amount of the loan can range from $1,000 (EUR 990) up to $2 million (EUR 1.9m). Loans can be repaid via regular monthly installments over a desired period, from 6 months up to 5 years. Nexo provides loans at an interest rate of 9% on business and 12% for personal loans. Note that this rate can change over time, and there are frequent promotions.

Nexo allows individuals to use their crypto assets as collateral without having to sell them first to fund their loans. The procedure is instant, and the funds are disbursed within 24 hours to your bank account. Since you use your cryptocurrency as collateral on Nexo’s wallet, Nexo does not need to credit check you because it has already verified that you have enough collateral to cover the loan.

What Crypto currencies Can I Use as Collateral?

Nexo currently offers loans backed by several crypto currencies including Bitcoin, Ether, Binance Coin (BNB), and Nexo’s own NEXO token. In addition, the company provides a blockchain-based underwriting process that uses artificial intelligence (AI) to assess the creditworthiness of its users.

How Do I Offer My Collateral?

To use your cryptocurrency as collateral you must transfer your crypto to your wallet hosted by Nexo. Because they are using your crypto as collateral, they have full custodian ownership of it in case of losses from your loan.

While on the Nexo platform, they keep your collateral safe through our multifaceted approach to security, including:

• Military-grade 256-bit encryption for your Nexo account.
• Storage in Class III vaults through leading blockchain custodians, including BitGo, Ledger Vault, and others.
• $375M insurance from our custodial partners via Lloyd’s of London and Marsh & Arch.
• ISO/IEC 27001:2013 certificate guaranteeing Nexo’s security infrastructure is of the highest standard.

How Trustworthy is Nexo?

Among the many other crypto services out there, Nexo is one of the more trustworthy ones as they have insurance to protect themselves against the unlikely chance that your crypto gets hacked or lost

In addition, Nexo has been licensed and registered by a large number of financial institutions and agencies. This makes it unlikely for them to up and disappear with your crypto and money.

What does it mean to be Licensed and Regulated?

From their website, in order to be licensed and regulated:

What We Need To Provide	Why Is It Important	What Does It Mean For You
Adequate operational capital	a) We are subject to the minimum initial capital and own funds requirement. Own capital requirement is intended for covering the risk of a provision of payment services. b) We protect your funds with our security measures (segregation of funds and funds insurance).	Your payouts are protected as entrusted to a company with adequate operating capital.
Internal and external auditor is mandatory	Our accounts are subject to additional check.	Four layers of defense for your business.
Sound Anti-money laundering (AML) policies and procedures	a) Risk-based approach (RBA) in assessing and managing the money laundering and terrorist financing risk to the company. b) We perform customer due diligence (CDD), identification and verification procedures, including enhanced due diligence, screening against UN, EU, OFAC sanction lists.	Our AML/CTF policies and procedures make us reliable partner within the financial sector safeguarding our own and your business reputation.
Data protection and security	We maintain high level IT security checks and data protection processes, access right procedures and data encryption.	Your sensitive information is safe and protected with us.

Bottom Line

If you’re an investor or holder of crypto currencies, and is in need of a loan, Nexo is definitely great option for you to get some of the best rates and terms in the industry. At the same time, you will not have to sell any of your crypto as they increase in value in a secure wallet – hosted by Nexo. I’m honestly a big fan of Nexo, and use it myself.

What if you are a crypto investor and in not currently in need of a loan? Well, you can still benefit off of Nexo!

Just like a bank, as other people use Nexo for loans, they get charged interest. If you leave you crypto in the custody of Nexo, they will also share some of the interest earned from their loans with you. Why would they do that and how much can you earn? I’ll talk about that in another article.