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Digital asset lender Leiden announced the completion of the first transaction of its kind in the asset-backed debt market, selling $188 million in secured bonds backed by Bitcoin (BTC).
This development is emerging as the loan market faces a volatile environment. Active loans have fallen to about $30 billion, and liquidation risks have increased as rates continue to fall.
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The agreement consists of two bonds, Bloomberg reported, citing sources familiar with the matter. One segment, classified as investment grade, was priced 335 basis points above the benchmark.
A report by S&P Global Ratings stated that the bonds are secured by a pledge of 4,078.87 bitcoins. The fair market value is about 356.9 million US dollars.
The loans carry a weighted average interest rate of 11.8%. Jefferies Financial Group Inc. acted as principal manager, arranger and initial buyer.
The S&P report explained that Leiden’s filtering engine is algorithmic trading software that aggregates prices from multiple exchanges and/or is available through multiple trading partners. The report said that Leiden liquidated Bitcoin collateral to repay 7,493 loans during its seven-year history, with an average LTV ratio on liquidation of 80.32%, and a maximum of 84.66%, without suffering any losses. The report added that on a weighted average basis, the settlement process after reaching the final LTV ratio took less than 10 seconds with little “slippage” during execution.
The Coinbase exchange is looking to expand its presence in cryptocurrency-backed lending. Users can borrow up to $100,000 in USDC, the stablecoin issued by Circle, via staking XRP, Cardano (ada), Dogecoin (DOGE), or Litecoin (LTC) as collateral via the DeFi protocol Morpho, the exchange said in a recent update.
The company explained that the service is available in all the United States except New York.
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Crypto loans decrease by 36% while active loans decrease
This comes at a pivotal time for the cryptocurrency lending sector, which has contracted sharply amid general market weakness. Data from Token Terminal showed that as of February 2026, active loans in loan protocols amounted to about $30 billion, down 36% from the September peak of $46.96 billion.
This decline coincides with an ongoing downward trend in the cryptocurrency market since October, which has probably amplified this downturn. The decrease in asset prices reduces the dollar value of the collateral offered, reducing the lending capacity and contributing to voluntary liquidations or reductions in leverage.
This mechanically compresses outstanding loan balances while reducing the total locked-in value when calculated in US dollars. Increased volatility puts increased pressure on leveraged positions, which promotes a decrease in active loans.
Leiden stated that during volatile markets: As the price of BTC falls, LTV increases, increasing LTV = increased liquidation risk, adding more collateral or paying part of the loan reduces LTV, there are tools that help, but understanding the mechanism always comes first. Post it.
At the same time, the total value closed via loan protocols fell from more than $89.7 billion in October to about $52 billion, according to Davy Lima. This represents a decrease of approximately 42%.
This decline reflects both the decline in asset prices and capital flows, as weak market conditions have reduced risk appetite, suppressed demand for new loans, and prompted users to reduce leverage or switch to lower risk assets.
