Email from Unchained:
You are receiving this email communication because you have taken a bitcoin-backed loan through Unchained. Despite having originated thousands of consumer loans and the positive feedback we’ve received about the service while to this day experiencing zero loan losses, we have a significant update regarding the availability of this product for consumers.
Due to external requirements, new loan originations to individual borrowers will be paused beginning January 1, 2024. We will continue originating new loans for legal entities such as LLCs or corporations after January 1 for business or investment purposes.
This means that Unchained will not be able to refinance or “roll over” existing loans beginning January 1, 2024 unless a refinance application is submitted by an entity (not individual) borrower with a stated business or investment purpose.
While consumer lending services will not be available for a time, please know that we are actively working on updating and expanding our consumer loan products and services during this pause. Although a significant project remains ahead in that regard, we look forward to delivering an enhanced borrowing experience upon restart of our consumer lending program.
If your loan has either an investment purpose or a business purpose, you may submit a loan application (for either a new loan or a refinance of an existing loan) to Unchained as those will remain eligible loan types, even after January 1. In the case of a refinance, the loan purpose must be indicated on your new refinance application.
By way of example, a Wyoming limited liability company (including but not limited to a limited liability company not taxed separately from its sole owner) would remain eligible to apply for an Unchained loan for any investment purposes or business purposes, even after January 1.
As always, loan applications are subject to approval. Unchained cannot guarantee the results of any loan application or credit availability. Future availability of credit products is never guaranteed.
We realize this is an unexpected announcement. We know that everyone’s individual situation is important to us and we are available to help. We appreciate you choosing Unchained as a trusted partner in your bitcoin journey.
If you have any questions regarding your options, please email us at lending@unchained.com or call us at (844) 486-2424, option 2 during business hours, which are 9:00 AM to 5:00 PM Central Time, Monday through Friday. Our team is available to help you and will respond as quickly as possible to emails and calls.
This news is a massive hit to bitcoiners who wanted to extract some cash value from their stack, while delaying selling.
Hypothetically, if an individual wanted to continue using Unchained loans, could they create an LLC and have that entity take out the loans on their behalf? I assume the LLC would have to pay the individual so the money could be spent personally (thus triggering an income tax requirement).
Could the individual fund the BTC loan directly? The LLC doesn't really own the BTC used to collateralize the loan. I assume when audited, the IRS is going to have all sorts of questions as to how a brand new LLC with no stated income was able to collateralize a $100,000+ loan.
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Consult your CPA.
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Similar thing happened with Ledn in Canada. They only do bitcoin backed loans for accredited investors now. The vice is tightening but honestly I thought nation states would have been much more aggressive than this.
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You can become an accredited investor in the US by taking a FINRA test; i got my series 65 a few years ago
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I think there are similar rules in Canada. I should consider it.
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Interesting. Does that just leave Ledn? Any other reputable folks doing BTC backed fiat loans the right way?
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131 sats \ 3 replies \ @OT 2 Dec 2023
Hodlhodl also has lots of USD loans. The maximum is 1 year so no rolling over.
Rates are based on current market which at the moment is around 18% & up. In a bull market those rates should come down as more people start to lend more.
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How does Hodl Hodl compare to Unchained in terms of BTC allocation? At Unchained there is no rehypothecation and each loan's collateral is stored in on the blockchain in a 2-of-3 multisig (Unchained and their partners have 2 of those keys).
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20 sats \ 1 reply \ @OT 2 Dec 2023
Its basically the same.
2/3 multisig with the lender, borrower & hodlhodl. You can add collateral if you need to. You get liquidated when LTV reaches 90%
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Also Hodl Hodl is P2P non-KYC, which is priceless.
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Due to external requirements, new loan originations to individual borrowers will be paused beginning January 1, 2024.
Anyone know what those external requirements could be?
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110 sats \ 1 reply \ @jeff 2 Dec 2023
Guys, we can do this P2P
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hodl hodl has a p2p lending platform i believe, havent tried it yet but it could come in handy one day for some…
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As I always saying... all these lending platforms could not survive in a Bitcoin world... How many times I have to be right ? When people will wake the fuck up and really adopt the Bitcoin standard?
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Bitcoin loans probably can't survive in a fully bitcoinitized world, but we're far from that. There's nothing inertly wrong with taking a levered position in Bitcoin's price going up.
I'm not saying YOLOing with FTX or some 20-to-1 options buying. But it's not an unreasonable bet to take a loan and delay selling BTC until the price is much higher.
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I suppose it's not without precedence that shady Bitcoin loan companies existed, folded and customers got rugged. Blockfi?
As much as that has nothing to do with well-managed outfits that have served many customers over the years without any issues, what does piss me off is that shady fiat loan companies and brokers of all kinds have been allowed to exist, persist and largely go by unregulated for decades if not hundreds of years. Thinking merchant of Venice.
Thinking payday loans, subprime loans. I think I saw a TV commercial at 99%APR the other day. Was listening to a podcast saying regulation is necessary. Well, it would have helped through the banking crisis of 2008 and way before it. But there wasn't really much then was there. Seemingly.
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The crackdown continues
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That's a bummer, loans still make sense in a fiat world where you want to avoid the tax implications, but it looks like the operation chokepoint is going to kill that, or you have to be part of some special crew once the dust settles, like a regulated bank to offer these services.
I guess the options are to start a small company if you want to go this route or use a P2P lending service like hodlhodl. Which to me is a good thing, disrupting the risk and making dealing with peers more common.
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I think this is great news it means plebs won't get rekt. Bitcoin is not a debt based system every debt based model on it will eventually fail
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Stay humble
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How long will the updating and expanding take?
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