Coinmotion Credit Account
Frequently Asked Questions
What is a Coinmotion Credit Account?
Through Coinmotion’s Credit Account, you can withdraw credit against your cryptocurrencies. Your cryptocurrencies can be used as collateral with a collateral value of up to 50%, depending on the crypto you hold. So you don’t necessarily anymore have to sell your cryptocurrencies, but instead, you can raise a loan in euros against your crypto as collateral. You can use the credit in the following ways, for example:
- Use short-term or long-term credit for your daily purchases or expenses
- Raise credit for your cryptocurrency purchases or more trading
- Transfer credit for your daily purchases with your Coinmotion Prepaid Debit card (coming soon)
We have made the costs very transparent and straightforward for you. Your outstanding Credit Account Balance will accrue interest on a daily basis. The interest rate is determined by the highest credit balance for each day. Accrued interest is charged first day of each month or in connection with the repayment of the loan within the month. The interest will be debited primarily from your Coinmotion Euro account, and secondarily will be added to your total credit amount. There is no charge for using the credit feature, and there are no costs other than interest on the credit itself. You can see all the credit account transactions in your credit account information. You can withdraw your credit and repay your credit flexibly on the Coinmotion platform. The interest rate is determined in accordance with Coinmotion’s price list.
Collateral values for different currencies:
- BTC 50%
- ETH 30%
- XRP 30%
- XLM 30%
- LTC 30%
What is the Loan To Value ratio (LTV)?
The LTV (Loan To Value) is expressed as a percentage and is calculated by dividing the drawn credit amount by the current euro value of the collateral.
- The amount of the drawn credit is 1,000 euros
- The euro-denominated value of the collateralised cryptocurrencies is EUR 2,000
- Lending ratio (LTV) = (1000 euros / 2000 euros) = 50%
Each cryptocurrency has its own collateral value, due to the individual characteristics of different cryptocurrencies, such as the risk profile. Bitcoin as the most established cryptocurrency offers you the highest collateral value. However, you do not have to calculate the collateral values for the different currencies yourself, we will do it automatically for you. The collateral values of all cryptocurrencies you have deposited into the Credit Account will be automatically added to the total amount of credit available in your Credit Account. By following this figure, you will know what your Loan To Value ratio (LTV) is and how much credit is available and can be drawn at any given time.
If the values of the cryptocurrencies stored as collateral increase, you will still benefit from their value appreciation. If the values of the collateralized cryptocurrencies increase, you can withdraw the excess collateral to your cryptocurrency account or take out more credit. Similarly, if the value of your collateralized cryptocurrencies decreases significantly, we may need to ask you to add more collateral to your Credit Account, or in the worst case, liquidate some or all of the collateral. More on this topic in the “Risks” section.
How do I activate my Credit Account?
You can activate your credit account by going to the Credit Account tab in Coinmotion. Activating the Credit Account for the first time requires signing a credit agreement. By accepting the terms and conditions of the Credit Account and reading the standard European Consumer Credit Terms and Conditions and the current Credit Account service fees, a credit relationship is established between the customer and Coinmotion. Activation of the account does not require a partial or full withdrawal of the credit, but the credit agreement only activates the use of the credit limit for the maximum credit amount indicated in the price list (maximum EUR 2,000). Once activated, your credit account will be available to you flexibly. You will only be charged with fees after you withdraw credit.
How do I withdraw credit?
By depositing cryptocurrencies as collateral into the Credit Account, the funds automatically act as collateral for the Credit Account. The collateral values of the different cryptocurrencies are added together under the “total collateral value” found on your Credit Page. Within the total collateral value of your credit account, you can take credit against your cryptocurrencies. Once you have approved the credit agreement, you can transfer the amount of credit that can be drawn to your Coinmotion euro account. The credit can be drawn in several installments and the credit acts as a continuous credit limit, within which you can flexibly draw credit if the value of the collateral allows. You will then be free to use the euros in your account as you see fit.
Repayment and cryptocurrency price changes
You can repay your credit in part or in full at any time you want. You may withdraw collateralized cryptocurrencies on your Credit Account at any time to your main cryptocurrency accounts in Coinmotion if your Total credit value level allows it. There is no monthly repayment on your credit, only the interest accrued will be debited from your Coinmotion euro account on the first day of the month, on a monthly basis. If the euro account does not have enough euros to charge the interest on the first day of the month, the interest will be added (capitalized) to the credit amount for later debiting. Capitalized interest will be charged at the end of each calendar year by liquidating an equal portion from the collateral. More information on cryptocurrency price changes and liquidation is provided in the “Risks” section.
The credit account will allow your collateral to still appreciate, as you will not have to sell your cryptocurrencies to access euros. If you use the credit account to make new cryptocurrency investments, this will also allow you to use the leverage in your cryptocurrency investments.
Coinmotion shows the credit rating of your collateralized cryptocurrencies in real-time. If the euro-denominated value of your collateralized cryptocurrencies falls after a market correction, Coinmotion will automatically send an e-mail reminder urging you to monitor the situation and take corrective action to avoid the collateral being liquidated. Coinmotion sends a reminder when the Loan-To-Value ratio (LTV) exceeds 60% and/or 70%. You can improve your credit rating by paying off the credit from Coinmotion’s euro account or by depositing more cryptocurrencies as collateral in the Credit Account.
Coinmotion will automatically liquidate a part of the collateral if the credit ratio reaches 80%. In this case, the collateral is liquidated and the credit is repaid automatically to the extent that the credit ratio returns to 70%. Even if you have not repaid the interest on your credit on a monthly basis (the interest has been capitalized into the loan capital), the collateral is liquidated annually only for the equal share of interest. All collateral liquidations are used solely and exclusively for loan repayments. NOTE! In the event of a sudden fall in the value of cryptocurrencies, several successive liquidations of the collateral may lead to a situation where the credit is repaid fully with collateral, but no additional funds remain from the collateral.
If, on the other hand, the value of the collateral increases significantly as a result of the positive price appreciation of cryptocurrencies, the amount of available credit may increase as the value of the collateral increases up to the maximum amount of credit. The collateral value of your cryptocurrencies in your Credit Account is determined in real-time. In this case, you can take advantage of the increased collateral value by increasing the amount of credit up to the Maximum credit amount per customer, which currently is up to EUR 2,000.
- Credit interest rate: 9 % p.a.
- Maximum credit amount: 2,000 euros
Loan to Value (LTV): LTV expresses a ratio of loans to the value of your collateral. The percentage tells how much of the collateral’s value has been taken as a loan.
Total credit value: How much of all your cryptocurrencies in total put up as collateral allow you to withdraw credit.
Total collateral value: The maximum collateral amount of all of the cryptocurrencies you have assigned as collateral by transferring them onto your Credit page.
Credit balance: The total amount of credit in use.
Euro account: Your account in Coinmotion, where your euros are stored.
Credit page: The main page of collateralized lending.
Credit limit: The amount of credit we can grant you within the framework of your collateral.
Maximum credit amount: The maximum credit amount available per customer at the moment.