Crypto-backed borrowing: reviewing the agreement and repayment capacity
Published 22/07/2025 · Updated 08/09/2026 · Houssen Issouf Aly, French chartered accountant
Crypto-assets · Companies · Directors
Practical guidance for companies and directors. Revised on 7 September 2026.
Start with the financing need
You plan to fund an investment or working-capital requirement using crypto-assets as collateral. Begin with the amount, duration and source of repayment. Keeping market exposure does not by itself make the loan suitable.
Identify the borrower, asset owner and recipient of the money separately. Personal assets securing company debt, or company assets supporting another person’s borrowing, require specific review of authority, purpose and commitments.
Distinguish a pledge from other arrangements
Article L226-5 of the French Monetary and Financial Code establishes a crypto-asset pledge regime originating in the law of 30 April 2025. The decree of 29 May 2026 specifies declaration requirements and aspects of implementation and enforcement. Not every commercial offer or protocol deposit necessarily falls within that regime.
Ask which law governs the agreement, which rights move, who holds the assets and whether they can be reused. Title-transfer arrangements require assessment of their actual clauses. A product name such as Lombard credit does not settle these questions.
Review the clauses that determine exposure
- Debt: currency, principal, interest, fees and repayment schedule.
- Collateral: accepted assets, quantity, haircuts, rights and restrictions.
- Valuation: price source, frequency and unavailable-market treatment.
- Thresholds: starting level, warnings, top-ups and enforcement conditions.
- Execution: authorised people, notices and dispute process.
- Exit: early repayment, release and return timing.
- Counterparties: contracting entities, custody and failure arrangements.
Reconcile marketing statements with the contract. Locate the actual formula behind a quoted threshold. Receiving an alert is different from being able to supply the funds it demands.
Understand loan-to-value
Loan-to-value rises when collateral value falls and debt stays constant. Haircuts and interest may change the contractual calculation; use the agreement’s definitions.
Simplified fictional example: €50,000 of debt against €100,000 of collateral gives a 50% ratio. If collateral falls to €70,000, the ratio becomes approximately 71.4%. Returning to 50%, ignoring interest, fees and haircuts, would require reducing debt to €35,000 or increasing collateral to €100,000.
That means repaying €15,000 or adding €30,000 of collateral at that valuation. The example recommends no threshold and establishes no automatic right to extra time. It illustrates the need to test adverse conditions before borrowing.
Plan repayment beyond market appreciation
Model delayed income alongside falling asset values. What remains available for normal instalments? Which other expenses must the business finance? Who can approve repayment or additional collateral during an absence?
Compare accessible financing alternatives using total cost and operational constraints. Do not make a future price rise the only repayment plan. Record the decision and limits agreed by the appropriate people.
Keep accounting and tax evidence
Retain the loan agreement, security documentation, asset statements, movement confirmations, interest calculations and fees. Reconcile principal, repayments, collateral movements and any sales separately.
Do not assume a universally tax-free outcome. Treatment depends on the transaction, rights transferred, holder and subsequent events. Enforcement or title transfer needs its own assessment. Consider financial-statement disclosures and commitments under the relevant accounting framework.
Questions before signing
Does an available offer suit my business?
Commercial availability does not establish financial suitability or the validity of every clause for your circumstances.
Does a smart contract remove the legal review?
No. Review both the technical mechanism and legal obligations, including enforcement.
What should HODL receive?
Prepare the complete offer, inventory, financing need and forecasts. The financial-planning guide and our support for directors describe useful records. Contact the firm to organise the assessment with relevant advisers.