Aven, a Silicon Valley fintech with more than 100,000 customers that offers a credit card grafted onto a home equity line of credit (HELOC), is launching a bitcoin-backed card. The new card lets consumers pledge bitcoin as collateral to access a credit line of up to $1 million over a term of up to 10 years. Its average percentage interest rates (APRs) range from 7.99% to 11.99%, notably lower than the average U.S. credit card rate of 21.52%, according to the Federal Reserve.

To use Aven’s new card, which became available today, customers must agree to have their bitcoin transferred to South Dakota-based BitGo, the cryptocurrency custody company Aven partners with. Aven requires the loans to be overcollateralized–people can’t borrow more than the value of the bitcoin they pledge.

Customers’ interest rates depend on how much collateral they put up. If they want a credit limit that’s capped at just 30% of their collateral’s value, they can access the lowest possible rate of 7.99%. To get a higher limit of 50% of their locked-up bitcoin, they’ll pay a 9.99% rate. And to receive the maximum limit of 70%, the interest rate is 11.99%. Each of those three rates is available regardless of a consumer’s credit score, though Aven says that condition could change in the future.

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Other companies have long been offering bitcoin-backed loans. Ledn, a Cayman Islands-based crypto lender, launched in 2018. It has issued $11 billion in bitcoin-backed loans and sells one-year loans at an APR of 9.99% to 11.49%, according to its website. Denver-based Salt Lending offers crypto-backed loans at a starting APR of 9.95%, while New York startup Arch begins as low as 8.49%. Publicly traded fintech Figure also offers crypto-backed loans, and in January SoFi CEO Anthony Noto said his San Francisco company will start to offer them this year.

Aven cofounder and CEO Sadi Khan says his bitcoin-backed loans are more competitive than others in the market because of their low interest rates and longer, 10-year term. Typically, bitcoin-backed loans must be paid back within a year. In terms of fees, Aven’s loans don’t have origination fees, and its cards have no annual fees. To pull cash out of an Aven loan, customers pay a 1% fee. The card also has late fees and a fee to add authorized users.

One watch-out: Bitcoin’s famous volatility could cause Aven to sell off your crypto and close your loan. If cardholders’ outstanding balance hits 70% of their collateral’s value, the card will lock to prevent new purchases or cash draws. If it hits 80%, they’ll have 72 hours to add more collateral or pay back some of the loan—if they don’t, Aven will sell some of their bitcoin to bring their loan-to-value ratio back down. And if their balance reaches 85%, Aven will immediately liquidate the loan. It will close the person’s credit line, seize and sell his or her bitcoin, charge a 2% liquidation fee and pay the customer back any remaining difference between the value of the collateral and the outstanding balance on the loan.

Customers can’t use Aven’s HELOC or bitcoin-backed credit cards to buy items in prohibited categories such as online gambling sites, cryptocurrency exchanges or prediction markets like Kalshi or Polymarket.

Khan first bought his own bitcoin in 2014 and says he had the idea to offer bitcoin-backed loans back when Aven was founded in 2019. He says that increased regulatory clarity over the past few years regarding bitcoin’s designation as a commodity (rather than a security) helped Aven get more comfortable with offering bitcoin-backed loans.

He believes crypto-backed loans will eventually carry the lowest borrowing cost of any asset-backed loan that Aven offers. “If you follow the physics of this, it should rationally in the long term have the lowest cost of capital,” he says. That’s because bitcoin is a digital asset that’s cheap to move and secure, and its value is easy to verify. Since its founding, Aven has issued more than $4 billion in loans across all of its products and says it has saved consumers more than $300 million on interest payments they would have otherwise paid with traditional, standard-rate credit cards and personal loans.

Aven doesn’t have a bank charter, so it partners with Washington state-based Coastal Community Bank to issue its cards. The startup borrows from financial institutions ranging from Goldman Sachs and community banks to private credit firms to fund its loans. Asked whether its lending capacity has been hurt by the recent exodus of capital out of some private credit funds, Khan says no, since Aven has a diverse set of funding sources and hasn’t borrowed from the funds that are under duress.