Blab Crypto
Square and SoFi Push Bitcoin into U.S. Banking, Raising the Prospect of Crypto-Backed Lending
Square and SoFi are moving Bitcoin from a niche payment option into the everyday toolkit of U.S. merchants and consumers, hinting at a future where digital assets could serve as collateral for loans.
Since the launch of its Bitcoin‑payment feature, Square’s payment‑processing arm of Block Inc. has onboarded more than 800,000 U.S. merchants. The company announced that the service will remain free through 2027 and that it projects an 82% increase in U.S. Bitcoin‑payment users between 2024 and 2026. Data from BTCMap shows the number of merchants accepting Bitcoin grew from 7,091 in March 2026 to 9,142 in May—a 29% jump in just two months.
Square’s merchants can earmark 12% of sales for automatic conversion to Bitcoin, and 89% of sellers say they plan to use the cryptocurrency as a long‑term savings vehicle. The zero‑fee policy, combined with no chargebacks and instant access to funds, makes Bitcoin an attractive option for businesses that want to hold or spend the digital asset.
SoFi, the national bank that has built a fintech‑style app, became the first FDIC‑insured U.S. bank to offer crypto trading in November 2025. The launch attracted more than 63,000 users in the first ten days. The bank also issued SoFiUSD, a dollar‑backed stablecoin on Ethereum and Solana, becoming the first U.S. national bank to issue a stablecoin directly to retail customers on a public blockchain.
After relaunching crypto trading, SoFi reported that 60% of its members who own crypto would prefer to buy, sell, and hold their digital assets with a licensed bank rather than a primary crypto exchange. The bank’s platform holds customer Bitcoin in a regulated environment, giving it a competitive edge over non‑banking exchanges.
The expansion of Bitcoin usage by Square and SoFi is already affecting deposit flows. Community institutions that serve depositors’ digital‑asset needs have seen up to 5% of deposits move into the digital‑asset ecosystem, according to a recent report by The Financial Brand.
The real strategic implication of these developments is the potential for Bitcoin‑backed lending. Andrew Begin, chief strategy officer at Galoy, notes that Bitcoin can be used as collateral in a manner similar to equities. "Bitcoin‑backed loans typically use a 50% loan‑to‑value ratio," Begin said. "The collateral is liquid and priced continuously, 24 hours a day." Current rates for Bitcoin‑backed loans range from about 9% to 13%, a spread that is lower than unsecured lending because the collateral can be monitored and liquidated in real time.
For merchants who accumulate Bitcoin through Square payments or for SoFi members who hold Bitcoin on the bank’s platform, the process of using the asset as collateral is managed entirely within the existing infrastructure. This contrasts with other platforms where volatility, custody rules, and margin‑call mechanics add complexity.
If Bitcoin holds or increases in value, consumers and businesses will be more likely to borrow against their holdings rather than sell them. That shift could give Square and SoFi a path to collateralized lending that many community banks are not prepared to match.
In short, while the immediate impact of Bitcoin payments is a shift in merchant revenue streams, the longer‑term effect could be a new class of collateralized loans. The move by Square and SoFi demonstrates that fintechs can capture user growth by integrating digital‑asset services, even if the broader market for cryptocurrencies remains uncertain.
The next few months will show whether the Bitcoin‑backed lending model gains traction. Community banks will need to decide whether to adopt similar strategies or to focus on traditional deposit‑based lending. Regulators will also watch how the integration of crypto assets into banking products affects consumer protection and market stability.
For now, Square and SoFi continue to expand their crypto offerings, positioning themselves at the intersection of payment processing, banking, and digital‑asset innovation.
Since the launch of its Bitcoin‑payment feature, Square’s payment‑processing arm of Block Inc. has onboarded more than 800,000 U.S. merchants. The company announced that the service will remain free through 2027 and that it projects an 82% increase in U.S. Bitcoin‑payment users between 2024 and 2026. Data from BTCMap shows the number of merchants accepting Bitcoin grew from 7,091 in March 2026 to 9,142 in May—a 29% jump in just two months.
Square’s merchants can earmark 12% of sales for automatic conversion to Bitcoin, and 89% of sellers say they plan to use the cryptocurrency as a long‑term savings vehicle. The zero‑fee policy, combined with no chargebacks and instant access to funds, makes Bitcoin an attractive option for businesses that want to hold or spend the digital asset.
SoFi, the national bank that has built a fintech‑style app, became the first FDIC‑insured U.S. bank to offer crypto trading in November 2025. The launch attracted more than 63,000 users in the first ten days. The bank also issued SoFiUSD, a dollar‑backed stablecoin on Ethereum and Solana, becoming the first U.S. national bank to issue a stablecoin directly to retail customers on a public blockchain.
After relaunching crypto trading, SoFi reported that 60% of its members who own crypto would prefer to buy, sell, and hold their digital assets with a licensed bank rather than a primary crypto exchange. The bank’s platform holds customer Bitcoin in a regulated environment, giving it a competitive edge over non‑banking exchanges.
The expansion of Bitcoin usage by Square and SoFi is already affecting deposit flows. Community institutions that serve depositors’ digital‑asset needs have seen up to 5% of deposits move into the digital‑asset ecosystem, according to a recent report by The Financial Brand.
The real strategic implication of these developments is the potential for Bitcoin‑backed lending. Andrew Begin, chief strategy officer at Galoy, notes that Bitcoin can be used as collateral in a manner similar to equities. "Bitcoin‑backed loans typically use a 50% loan‑to‑value ratio," Begin said. "The collateral is liquid and priced continuously, 24 hours a day." Current rates for Bitcoin‑backed loans range from about 9% to 13%, a spread that is lower than unsecured lending because the collateral can be monitored and liquidated in real time.
For merchants who accumulate Bitcoin through Square payments or for SoFi members who hold Bitcoin on the bank’s platform, the process of using the asset as collateral is managed entirely within the existing infrastructure. This contrasts with other platforms where volatility, custody rules, and margin‑call mechanics add complexity.
If Bitcoin holds or increases in value, consumers and businesses will be more likely to borrow against their holdings rather than sell them. That shift could give Square and SoFi a path to collateralized lending that many community banks are not prepared to match.
In short, while the immediate impact of Bitcoin payments is a shift in merchant revenue streams, the longer‑term effect could be a new class of collateralized loans. The move by Square and SoFi demonstrates that fintechs can capture user growth by integrating digital‑asset services, even if the broader market for cryptocurrencies remains uncertain.
The next few months will show whether the Bitcoin‑backed lending model gains traction. Community banks will need to decide whether to adopt similar strategies or to focus on traditional deposit‑based lending. Regulators will also watch how the integration of crypto assets into banking products affects consumer protection and market stability.
For now, Square and SoFi continue to expand their crypto offerings, positioning themselves at the intersection of payment processing, banking, and digital‑asset innovation.
