How Crypto Is Rebuilding Lending

I spent 25 years in lending before I ever looked at a blockchain. So when people ask me whether "crypto lending" is real, my honest answer is: that's the wrong question. The right one is which crypto lending — because the term covers at least four completely different things, and lumping them together is how both the hype and the skepticism go wrong.

Lending has always been a trust business. Will they pay me back? To manage that one question, we built an enormous apparatus — credit bureaus, underwriters, title companies, servicers, custodians, paperwork, and time. Every layer exists to manufacture enough trust to move money.

What blockchain changes is the substrate. Instead of trusting an intermediary's word, you can verify the collateral, the reserves, and the terms directly. That's the thread running through all four forms below: lending that runs on verifiable proof instead of borrowed trust — and, done well, ends up faster, cheaper, more transparent, and harder to defraud.

So let me draw the map I wish I'd had when I started.

The four forms, in one breath

Here's the whole taxonomy before we go deep on each:

1. Borrow against the crypto you own. Pledge your Bitcoin, draw cash. The closest cousin to a traditional secured line of credit.
2. DeFi — programmable, on-chain lending. Permissionless pools where code, not a loan officer, sets and enforces the terms.
3. Tokenized real-world credit. On-chain money funding off-chain borrowers — the crypto analog to private credit and business lending.
4. Blockchain rails for mainstream lending. Ordinary mortgages and HELOCs, originated and settled on a blockchain to make the whole process faster and cleaner.

They run on a spectrum — from crypto-native, to crypto-as-collateral, to real-world-on-chain, to traditional-finance-on-new-rails. And the most interesting story in the entire space is what happens where they converge. We'll get there.

One number to frame it all: total crypto-collateralized lending hit an all-time high of roughly $73.6 billion in the third quarter of 2025, according to Galaxy Research. Hold that figure. We'll measure it against the legacy market at the end, and the comparison is not what most crypto skeptics expect — or what most crypto boosters claim.

Form 1 — Borrow against the crypto you own

This is the form most people mean when they say "crypto lending," and it's the easiest to understand because it's the oldest trick in finance: post an asset you own as collateral, borrow against it, keep the asset.

If you hold Bitcoin and believe it's going higher, selling it to raise cash is painful twice over — you lose the upside, and in a taxable account you trigger a capital gain. A crypto-backed loan lets you pledge the Bitcoin, draw dollars or stablecoins against it, and keep your position. In traditional terms, it's a securities-backed line of credit, just with BTC instead of a brokerage portfolio.

The honest players here are easy to rank by one thing: how verifiable their numbers are.

• Coinbase, whose Bitcoin-backed loans run on the Morpho protocol on Base, had originated more than $1.2 billion cumulatively with over $800 million outstanding within about eight months of launch. I trust those numbers most because they settle on-chain — anyone can verify them.
• Ledn reported an $836 million outstanding loan book at a 42.7% average loan-to-value as of September 30, 2025 — and it's attested by a third-party accounting firm, which in this industry is rare and worth rewarding. Ledn also issued a rated Bitcoin-backed bond, a genuine first.
• Nexo's loan book is around $2 billion outstanding, per Galaxy's external tracking. I cite the third-party number on purpose; Nexo's own marketing throws around figures like "$371 billion processed," which conflate deposits and trades with actual lending. Ignore the vanity metrics.

What about crypto mortgages?

This is where it gets interesting for someone with my background. A handful of lenders will now let you buy a house using crypto as collateral. The pioneer, Milo, has originated roughly $100 million in crypto mortgages since 2022 across about a hundred borrowers — real, but boutique.

The more consequential development came in March 2026, when Better, Coinbase, and Fannie Mae announced a structure pairing a crypto-collateralized down-payment loan with a conforming first mortgage. It hasn't originated volume yet. But the moment a government-sponsored enterprise blesses any crypto-linked structure, the category stops being fringe. I'll come back to that in the outlook.

Form 2 — DeFi, where code is the loan officer

DeFi lending is the most measurable form, because it all happens in the open on public blockchains. As of mid-June 2026, there were roughly $23.8 billion in active on-chain loans across decentralized lending protocols, according to DeFiLlama. The market is strikingly concentrated: Aave alone accounts for about 42% of all on-chain borrowing, and Aave plus Morpho together make up roughly 57%.

Here's the part traditional lenders need to understand, because it's the opposite of how we think. DeFi lending is almost entirely overcollateralized. To borrow $100 of a stablecoin on Aave, you first lock up something like $150 of ETH. There's no credit check, no income verification, no FICO score. A loan-to-value ratio and an automated liquidation engine are the entire risk model — if your collateral falls below the threshold, a bot sells it instantly to make the lender whole.

So is this even "credit"? Not in the sense I spent 25 years practicing. Traditional credit is a bet on a borrower's future cash flow — their promise and ability to repay. DeFi lending is liquidity extended against assets locked up today, enforced by code. It's closer to a programmable pawnshop or a margin account than to a mortgage. People use it for leverage, for liquidity without selling, and for yield strategies — not to buy a home or fund a business.

That sounds like a limitation, and in reach it is. But the innovation is real and it's about verifiability: every position, every collateral ratio, every liquidation is visible on-chain in real time. There's no opaque loan book to blow up in the dark. After the failures we'll discuss in a minute, that transparency is not a small thing.

The arc tells the story. According to Galaxy Research, all crypto lending peaked around $64.4 billion in late 2021, the DeFi piece collapsed to roughly $7 billion through the 2023 bear market, and on-chain borrowing then rebuilt to a fresh high of about $41 billion by the third quarter of 2025. DeFi recovered faster and cleaner than its centralized cousins — and it did so precisely because it never relied on trusting a counterparty's word.

Form 3 — Tokenized real-world credit

The first two forms are crypto borrowing against crypto. Form 3 is where blockchain starts touching the real economy: on-chain capital funding off-chain borrowers. This is the closest analog to the private credit and business lending I came up in.

Two things get lumped under "real-world assets," and separating them matters:

• Tokenized credit — actual on-chain lending to real businesses and funds — sits around $6.1 billion in genuinely circulating value, per rwa.xyz. Maple Finance is the largest pure player, with about $1.75 billion in active loans.
• Tokenized Treasuries — essentially on-chain money-market funds from names like BlackRock, Ondo, and Franklin Templeton — are larger, around $15 billion.

That ratio is the insight: tokenized Treasuries are roughly 2.4 times the size of tokenized credit. So when you read breathless headlines about "RWA tokenization exploding," understand that most of that growth is money-market funds moving on-chain, not lending. The lending piece is real and growing, but it's earlier and smaller than the narrative suggests.

What makes this form matter long-term isn't today's size — it's access. Tokenization can fractionalize a private credit fund that used to require a $5 million minimum, settle it globally in minutes, and make it transparent. That's the same democratization story that index funds brought to equities, aimed at a corner of finance that has stayed stubbornly institutional.

Form 4 — Blockchain rails for the lending you already use

Now the form almost nobody categorizes correctly — and the most consequential one.

The largest "crypto lending" number in the entire space doesn't come from Bitcoin loans or DeFi. It comes from ordinary American homeowners taking out home equity lines of credit. Figure — the largest non-bank HELOC originator in the country — has originated more than $16 billion in HELOCs cumulatively (over $18 billion by late 2025), with a serviced book around $9.6 billion, according to its SEC registration filing. In 2024 alone it originated about $5 billion, up 51% year over year.

Here's the distinction that matters: a Figure HELOC is a completely conventional consumer loan. The collateral is the borrower's home equity, underwritten the normal way. What's different is the plumbing — the loan is originated, recorded, and settled on a blockchain. That turns a process that traditionally takes weeks of paperwork into one that can close in days, with a tamper-evident record and a secondary market where those loans can trade with provenance built in.

So is it "crypto lending"? By the strict crypto-collateral definition, no — and you should be precise about that. But by the definition that actually matters — using blockchain to make credit faster, cheaper, more transparent, and harder to defraud — it's the clearest, largest-scale proof that the technology works for mainstream borrowers. This is what it looks like when the new rails carry the loans ordinary people actually use.

That's why the Better–Coinbase–Fannie Mae structure I mentioned earlier is such a tell. The frontier of this whole space isn't crypto replacing traditional lending — it's the two converging. Crypto-era infrastructure delivering the conforming mortgage. Tokenized assets posted as collateral against a normal loan. The line between "crypto lending" and "lending" starts to blur, and Figure is the furthest-along example of what's on the other side.

The runway — how much of lending is still on the old rails

Now let's measure. If all crypto-collateralized lending peaked around $73.6 billion, how big is that against the lending market I grew up in?

Total U.S. household debt is about $18.8 trillion. So all of crypto lending, at its all-time peak, equals roughly 0.2% of U.S. mortgage debt alone.

A skeptic reads that and says: see, it's a rounding error. I read it differently. That's not a ceiling — it's a runway. Every one of those trillion-dollar categories still runs almost entirely on legacy rails: weeks of processing, layers of intermediaries, opaque records, fraud surface everywhere. Figure has shown the HELOC line can be rebuilt. Almost none of the rest has been touched yet.

And the map of where crypto has and hasn't reached is itself revealing. Crypto-backed personal loans exist and are growing. Crypto mortgages are early but real. Tokenized credit is touching business and commercial lending. But auto lending, a $1.69 trillion market, is essentially untouched — there's no real crypto auto-lending category at all. That's not a failure. That's a map of where the work hasn't started.

What 2022 taught us — and why it strengthens the case

I can't write honestly about this space without the wreckage. The total crypto lending market peaked at $64.4 billion in late 2021, and the centralized piece — about $34.8 billion at its top — was concentrated roughly 76% in three firms: Genesis, BlockFi, and Celsius. Within about six months in 2022, all three were bankrupt. BlockFi had originated over $47 billion cumulatively. Genesis had more than $12 billion in active loans. Gone.

It's tempting to read that as an indictment of crypto lending. I read it as an indictment of a specific, old failure mode: opacity and rehypothecation. Those firms took customer deposits, lent them out, re-lent the collateral, and did it all behind a curtain nobody could see through. It was a trust-based business that abused the trust — the oldest financial failure there is, in a new wrapper.

Look at what rebuilt afterward. The survivors and the new entrants compete on exactly the thing the failures lacked: proof. Proof-of-reserves attestations. On-chain collateral you can verify yourself. No rehypothecation. Ledn publishes an attested open book. Coinbase's loans settle where anyone can check them. DeFi never stopped being transparent and recovered fastest of all.

The 2022 collapse didn't disprove crypto lending. It proved the thesis — that lending built on verifiable proof is sturdier than lending built on borrowed trust.

Where this is headed

I'll close with the part I find most compelling, because it's where my traditional-finance instincts and what I'm seeing on-chain finally line up.

Regulation is arriving, and clarity is rocket fuel. The GENIUS Act gave stablecoins — the dollars that move through nearly all of this — a real federal framework. The SEC has issued guidance on tokenized securities. Institutions don't deploy serious capital into legal ambiguity; they deploy into rules. The rules are now showing up.

The mainstream gatekeepers are opening the door. A Fannie Mae–eligible structure touching crypto collateral would have been unthinkable two years ago. Tokenized Treasuries grew from roughly $13 billion to $15 billion in a matter of months. These are the leading edges of adoption, not the fringe.

The forms are converging. Five years out, I don't think we'll talk about "crypto lending" as a separate category any more than we talk about "internet banking" today. Blockchain will be the default settlement layer underneath a lot of ordinary loans. Tokenized assets — Treasuries, funds, eventually real estate — will be normal collateral. Proof-of-reserves will be table stakes, the way audited financials are now.

That's the map as I understand it today. I'm still working through plenty of it, and I'll update this report as the numbers move — they move fast. But the shape is clear: four forms, one direction, and a very long runway ahead.

Methodology & sources

This report separates crypto lending into four models and sizes each against the U.S. traditional lending market. Figures are as of June 16, 2026, and every number traces to a primary or named source.

• On-chain figures (DeFi active loans, tokenized credit, tokenized Treasuries) are from DeFiLlama and rwa.xyz, retrieved June 16, 2026. These move daily; cited values are point-in-time. Used with attribution; not republished in bulk.
• Historical and CeFi/DeFi market figures are from Galaxy Research.
• Figure figures are from its SEC registration statement.
• Platform figures (Coinbase/Morpho, Ledn, Nexo, Milo) are from company disclosures, third-party attestations, and Galaxy tracking, labeled in context by reliability.
• Traditional lending denominators are from the Federal Reserve (Z.1, G.19, H.8), the New York Fed Household Debt and Credit Report, and the Mortgage Bankers Association.

Where a figure could not be verified to a primary source, it was omitted rather than estimated.