Collateral management
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      How does the CTP ratio impact my loan?

      An under-collateralized loan may be headed for a CTP violation.

      Effective July 10, 2024, pre-maturity redemptions of collateral from active loans are discontinued. Loans will need to be paid in full (in cash or by an approved refinancing application) in order to release bitcoin held under the terms of any loan documents. Incremental bitcoin deposits to strengthen a loan’s collateral-to-principal ratio can be made at any time.

      The collateral-to-principal ratio (CTP)

      The collateral-to-principal (CTP) ratio is the ratio of a loan’s collateral value to the principal amount. This is the inverse of loan-to-value (LTV) for a loan. The formula for CTP is:

      CTP = (BTC/USD price × amount of BTC securing loan) ÷ principal balance

      Lower CTP can result in a CTP violation

      For loans where the collateral-to-principal ratio is less than 150%, CTP violations are issued. We recommend that loan clients review our CTP violation process.

      Learn: Read more in our Ultimate guide to bitcoin-backed loans.