How Figure Structures Crypto-Backed Loans to Unlock Bitcoin Liquidity

According to blockchain.news, Figure executive Sam Mei has detailed the mechanics behind the firm's crypto-backed loan product, a structure that lets Bitcoin holders draw liquidity against their BTC without disposing of it or triggering a taxable sale.

Inside the collateral structure

The product runs on a collateralized lending model: the borrower pledges Bitcoin, the platform issues fiat against a defined loan-to-value ratio, and the holder retains their BTC position while accessing cash. Because the underlying BTC never changes ownership, no disposal event is recorded against the borrower and no taxable sale is created — the asset stays on the borrower's balance sheet and the cash arrives as loan proceeds rather than trade proceeds. If the collateralization ratio falls below the platform's liquidation threshold during a drawdown, the collateral is sold to cover the outstanding debt. The LTV ceiling is therefore the most consequential parameter in the stack: it defines how much price volatility the position can absorb before forced deleveraging begins, and it sets the upper bound on how much fiat a given BTC balance can extract.

What Mei's selection criteria actually filter

According to blockchain.news, Mei's breakdown centered on the underwriting gates that determine which borrowers and which collateral profiles the platform accepts. The report notes that institutional desks now weigh price action directly against loan-to-value ratios before extending fresh credit lines — a parameter that decides whether margin calls will fire during a drawdown. In practice, the same BTC balance can be eligible at one LTV band and rejected at another, depending on how the platform calibrates its risk envelope relative to recent volatility. For borrowers, the implication is that collateral sufficiency is not a static figure but a moving one tied to the price feed the platform chooses — and the criteria Mei described effectively function as a filter on which side of that line a given wallet lands.

Why LTV is the lever that matters

For practitioners evaluating a Figure-style structure, the technical lever worth dissecting first is the LTV ceiling itself. The parameter sits at the intersection of oracle latency, liquidation mechanics, and rate design — and each of those deserves separate scrutiny. Confirm which price feed sources the collateral valuation and how often it updates; a feed that lags during fast markets is a feed that triggers surprise liquidations. Read the liquidation waterfall to determine who purchases the BTC if the position unwinds and at what discount. Verify whether interest accrues on a fixed schedule or scales dynamically with platform utilization, since variable-rate structures can compound quickly when credit demand surges. The highest-leverage decision a borrower makes remains the LTV ceiling: model a meaningful drawdown against the historical worst case for the chosen price feed and confirm the position survives without forced liquidation. As more venues replicate this collateralized architecture, the differentiator will not be the headline rate but the quality of the price feed, the clarity of the liquidation path, and the discipline of the LTV band the platform enforces under stress.