Lending Risk FAQ
When using Bitvavo’s Lending service, you can earn rewards on a supported range of digital assets. By opting in for Lending for a specific asset, you agree to lend all of your current and future digital assets of that type to Bitvavo Custody BV, a Bitvavo Group company. You also agree that Bitvavo Custody lends all your digital assets, for which you have enabled Lending, to third-party lending partners. These lending partners perform various activities to earn rewards with the funds borrowed and share these earnings with Bitvavo Custody. Bitvavo Custody in turn distributes parts of these earnings back to you, as a pay-off for lending your digital assets.
Yes, there are certain risks involved. Bitvavo Custody carefully selects its lending partners. Even so, it may happen that a lending partner defaults and becomes unable to return the digital assets that have been lent to them. In this case, Bitvavo Custody will likely not be able to return your lent digital assets to you, leading to a full or partial loss. Bitvavo Custody and any other Bitvavo group companies will not be under an obligation to do so.
We work with multiple third-party lending partners, including lending platforms, market makers and trading firms. We regularly review our relationship with our lending partners to provide high reward rates while keeping risks as low as possible. All Bitvavo lending counterparties undergo an elaborate screening process to determine creditworthiness and set appropriate limits aimed at mitigating risk. We may at any time choose to engage new lending partners or disengage the partners we work with. This may result in a sudden change of the lending rates, or a temporary halt of the Lending service.
The Lending service is not covered by any deposit guarantee scheme, other type of insurance or any guarantee against losses. This might result in losing part or all of your lent digital assets in the unusual instances if a lending partner defaults.
The Lending reward rates may change from time to time, at Bitvavo’s discretion, as the rates are subject to changes caused by market supply and demand. It is possible that the Lending reward rates decrease after you’ve already agreed to lend your digital assets.
With Bitvavo Lending, it is not required to lock up your digital assets for a set period of time. Respectively, there are also no opt out fees. When using the Bitvavo Lending service, you will still be able to trade and withdraw the digital assets you lent the same way as you would do for any other digital asset on your Bitvavo account.