This is no different than getting a line of credit against your home or business. If you don't repay you fork over the asset.
That being said if I was to take a loan against my bitcoin, the bank should be paying ME interest to get my bitcoin.
So unless these come at a negative rate (which it won't) they are a scam.
Except a home or a business is not money. It's not liquid.
There is no good reason to use money as collateral for money UNLESS what you're really trying to do is short fiat on leverage.
It's about the equivalent of taking your bitcoin to a pawn shop.
Usually you swap debt for an asset. A bank is always happy to swap an asset for debt.
Imagine getting your money to a pawn shop instead of simply spending it. I don't understand why someone would want to pawn their money.
UNLESS this person is looking for a way to leverage short fiat.
