Bitcoin lending has entered a new institutional phase, with banks increasing overcollateralized, transparent lending after the 2022 collapses of major crypto lenders, bringing total crypto‑backed loans to $67 billion.

The 2022‑2023 crypto credit crisis saw the failures of Celsius, BlockFi and Genesis due to leverage and asset rehypothecation, prompting a shift toward conservative underwriting practices.

Institutional momentum is building as banks expand bitcoin‑backed credit facilities; total crypto‑backed lending rose 49% year‑over‑year to $67 billion, according to a Silicon Valley Bank report. Ledn completed the first investment‑grade‑rated BTC‑backed asset‑backed security, and lending rates range from 7.5% to 16% APR, higher than traditional financing but potentially narrowing with greater bank participation.

Early examples include Strike’s 7.5% rate on term loans over $5 million, backed by a $2.1 billion Tether credit facility. The Lightning Network is cited as a catalyst that could enable near‑instant, low‑cost collateral movements, improving efficiency and scalability within established financial markets.

Growth will depend on expanding institutional capital access and borrower demand; the market could scale toward $1 trillion over the next decade if trends continue.