Bitcoin-backed loans are being discussed increasingly in the media (see Cointelegraph link below). The failures of Celsius and BlockFi have taught current market players valuable lessons about risk management. However, a question still remains: why are interest rates still so high (8%-12%) when Bitcoin is the ultimate collateral?

In my opinion, interest rates will decrease rapidly. This shift will likely begin in the US, where banks are no longer bound by the SAB 121 accounting rule. As a result, they will be able to offer financial services that involve custody of crypto assets, such as using bitcoin as collateral for loans. This development will attract significant amounts of risk-averse liquidity, and rates will inevitably decrease substantially.

The EU and the rest of the world will follow this same path at different speeds, leading to the same results. I’m glad that my company, Firefish.io, is educating the EU markets to this upcoming opportunity.