Nexo, the fin-tech startup backed by Arrington XRP Capital recently unveiled a crypto credit card. According to Nexo, this is the first product of its kind in the world. The company claims this card will allow users to spend the value of the crypto they own without spending any of it. Another benefit of this card is that it will not consider any monthly or annual foreign exchange fees. 

How it will Work

According to Nexo, when using this card to make purchases, users will be paying using the revolving credit line from Nexo, which is backed by the crypto you hold. As such, you will not have to sell these coins. 

How it is Unique

Nexo is working with an unnamed entity in the issuance of the card. It will allow users to spend the value of their crypto. Unlike other credit cards based on crypto such as Crypterium and TenX, which convert crypto into fiat for each transaction, Nexo will use the crypto holdings as collateral and issue a loan in fiat. Since the company was created, it has thus far managed to offer over $700 million in fiat loans collateralized by crypto to more than 200,000 people. Those who take these loans will now be able to use them to make purchases at stores that accept the MasterCard.

Once users swipe their card, an oracle will confirm if the user has enough collateral to cover the purchase in fiat and the loan is executed and payment settled in fiat. According to an official from Nexo, the card issuer is already a licensed firm within the European Economic Area. With more partnerships in the future, the company plans to extend operations into American and finally Asia before the end of 2019. 

No Credit History Needed

Unlike the usual credit cards, this card does not require the credit history of a client. This is because staking crypto reduces the default risk. Besides that, interest rates are between 8 and 24 percent. They vary depending on the structure of the loan and the local regulations. 

Users are allowed to repay the loan in fiat and crypto. However, those that opt to pay using the Nexo token will get the interest rate reduced to 8 percent. Besides that, all minimum payments have been eliminated in case the value of BTC grows. The reason for this is that this is a dynamic credit line. It means that as the value of collateralized assets grows, the fiat debt reduces. 

Examples of this Credit Line in Use

A good example of the use of this credit line is Brock Pierce, who mortgaged a house in Amsterdam via a $1.2 million credit line via Nexo. Since then, he has not had to make even one repayment due to the rising price of BTC since he received the loan. 

Rules for Getting Loans

This company will only issue loans to those that comply with KYC rules. The Nexo platform will also work with Chainalysis to ensure that crypto coming into the platform has not been gotten via illicit means. 

Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. The information has been obtained from sources we believe to be reliable; however no guarantee is made or implied with respect to its accuracy, timeliness, or completeness. Authors may own the crypto currency they discuss. The information and content are subject to change without notice. Visionary Financial and its affiliates do not provide investment, tax, legal or accounting advice. This material has been prepared for informational purposes only and is the opinion of the author, and is not intended to provide, and should not be relied on for, investment, tax, legal, accounting advice. You should consult your own investment, tax, legal and accounting advisors before engaging in any transaction. All content published by Visionary Financial is not an endorsement whatsoever. Please also visit our Privacy policy; disclaimer; and terms and conditions page for further information.