Financial startup Nexo is launching a MasterCard with a line of credit backed by the user’s crypto holdings. As per the company, the world’s first such card that would enable users to spend the value of their cryptocurrency without spending it.
When using the Nexo Card to purchase goods and services, you actually pay using your Nexo flexible open-ended revolving credit line that is backed with your crypto holdings and thus not selling any of them, which is giving you the freedom to spend today and sell your holdings whenever you want in the future to pay back the loan. – Nexo.
The cards will be available to the clients with an interest rate set between 8 and 24 percent APR based on the loan structure and local regulations. Users can repay their loans using crypto though it will reduce interest rates to 8 percent. If somehow the cryptocurrencies crash then users will have to “deposit more crypto, pay a part of their loan to reduce exposure, or sell a portion of their collateral to restore the loan-to-value ratio,” Trenchev said.
The instant crypto loans firm partnered with an unnamed intermediary to issue cards that would let users spend the value of their crypto without actually spending it. The company has seen a surge in its business from $700 million in crypto-collateralized loans to over 200,000 clients. Nexo now plans to expand its firm to the U.S. and Asia by the end of the year.