A new Australian company is offering loans. What makes it unique is that they offer loans backed by cryptocurrency.

So, what do we know about Helio? How do the loans work, and why would you want a cryptocurrency loan?

What is Helio?

Helio Lending hasn’t been around for very long; they only launched a few months ago. The team behind Helio didn’t just spring out of the ground, however. The team includes experts in digital currencies and blockchain, law, and investment.

One might expect for the team behind just about any crypto and blockchain service to be younger; and therefore potentially less experienced. While Helio does have some younger faces, much of the executive board is made up of people who have been in the business for a while.

How Does a Cryptocurrency Loan Work?

The structure of a Helio cryptocurrency loan is immediately approachable. From a banner on the top of their homepage, visitors can select which cryptocurrency they would like to use to finance the loan. They can also set the amount, repayment type, term of the loan and LTV. Of course, this is just to let visitors know what they might be looking at in terms of repayments. Clients still need to apply for the loan. However, Helio does promote same-day financing and the ability to lock in terms.

Once the terms of the loan have been finalised and the borrower has been approved, their cryptocurrency collateral is transferred to Helio. The company then transfers the funds to the borrower’s bank account.

After the loan has been repaid, the borrower has the option to reclaim their cryptocurrency. Or, they can use the amount to refinance the loan or take out a new loan.

Why Would You Want a Cryptocurrency Loan?

There are a number of reasons individuals may want a crypto-backed loan, despite the unconventionality.

For one thing, there are a lot of people out there that have a lot of money in cryptocurrencies. And despite the recent drop in cryptocurrency prices, they remain worth far more than they were when early investors bought into them.

Until the mass crypto adoption becomes reality, there are still relatively few options for crypto holders to use their assets as collateral for loans.

This means that most people who are “crypto-rich but penny-poor” need to sell their cryptocurrencies in order to use the funds to finance expensive ventures.

In an interview with BusinessBuyInvest, John O’Shea, Helio’s managing director and founder, explained:

The ability to be able to lend to people that had an asset in crypto space was very very exciting. And after doing a lot of research, we realised that there was no one in Australia offering this solution. And there was only about two or three providers globally.

One potential game-changer that Helio presents is the ability to use cryptocurrency to finance a loan for conventional funds and then get their crypto back when the loan is paid off.

Is a Cryptocurrency Loan Right for You?

If you have cryptocurrency and need cash but don’t want to sell your crypto, Helio might be right for you. However, there are a couple of other important things to consider.

For one thing, Helio is still a loan service. You’ll need to actually qualify for the loan and you’ll need to be able to pay it back.

Another thing to consider is that, as of this writing, Helio only accepts a handful of cryptocurrencies. If you want to use Helio but don’t have — or don’t have enough — Bitcoin, Ethereum, Litecoin, or Ripple, you’ll have to convert your funds. That probably means selling some of the other cryptocurrency you have to buy more of one of these. That can require some complicated math, given the exchange rates of different cryptocurrencies.

There’s also the natural concern that many people feel dealing with any new blockchain or crypto company or any new lending service. And Helio is both. However, right now, we don’t have any reason not to trust Helio, though doing your due diligence is of course necessary.

And until other crypto-friendly lenders show up, there aren’t many options out there for the kinds of services that Helio provides.

What Do the Crypto-Backed Loans Mean for the Market?

Since institutional investors are officially entering the crypto market, true institutional investment will become possible – as one of the Helio clients mentions on the company’s site – through platforms such as Helio Lending. Giving mentors the opportunity to gain liquidity on their blockchain-based assets, without selling them completely, changes the long term outlook for cryptocurrency.

As Helio is currently providing a unique service in offering loans backed by crypto,
it is definitely worth keeping an eye on the company; as well as watching for other companies — new or familiar — who may begin to offer similar services.