Kalshi and BitGo launch crypto-backed loans for futures margin

Kalshi Prime and BitGo launched a service on October 22 that lets eligible traders borrow US dollars against their crypto and use the cash as trading margin. The borrower keeps the coins.

The firms call the product HODL Margining and announced it through a Business Wire press release. Bloomberg first reported the plan on October 21, citing a company statement and an interview with Jeff Bandman, chief executive of Kalshi Prime.

How the borrowing works

Kalshi Katalyst, a lending affiliate of Kalshi Prime, makes the loans. A trader pledges bitcoin (BTC), ether (ETH) or stablecoins that meet the US GENIUS Act rules. Those coins stay in custody at BitGo Bank and Trust, an OCC-regulated digital asset trust bank. Katalyst then sends the dollars straight into the trader's Kalshi Prime account, where the firm's margin, segregation and risk controls apply. The cash funds positions on perpetual futures and other products that trade on KalshiEX, the group's exchange.

Three parties sit in the deal. The client borrows. Katalyst lends. BitGo holds the pledged coins. The borrower keeps legal title, subject to the lender's security interest, and the assets are never moved to an exchange or sold for cash. BitGo says it carries insurance of up to $250 million on the assets it custodies, and the companies expect more custodians to join the network over time.

Why Kalshi built it

Bandman said the aim was to let traders hold their crypto instead of selling to raise cash. "What we wanted to do was make it possible for customers to stay in crypto," he told Bloomberg. He first pictured crypto-native traders, including people already trading perpetual contracts on offshore venues that US rules do not reach. The pitch there is a regulated route with a named US custodian behind it.

Then the odd requests arrived. Bandman said he kept hearing use cases "come out of the woodwork," among them a Latin American business that runs on dollar stablecoins and trading firms that treat their coin stacks as working capital. Mike Belshe, chief executive and co-founder of BitGo, put the appeal plainly in the release. Eligible clients can borrow against their holdings to fund margin, he said, rather than cashing out.

The cost of a crypto-backed loan

A loan is not free money. Borrowers owe repayment with interest and fees whatever the trade does. Win or lose. The companies have not published interest rates, loan-to-value limits or the exact point at which pledged coins get sold, and neither firm said how many clients have signed up.

Price swings make the math harder. If bitcoin or ether falls sharply, the collateral loses value at the same moment a leveraged position may be losing money, and the lender can sell the coins to cover the debt. Bitcoin traded near $81,600 at 12:41 UTC on October 22, down about 2.3 percent on the day, according to CoinGecko. A holder who borrowed rather than sold keeps exposure to any rebound, and to any further fall.

One line in the release carries real weight. Kalshi Katalyst and its loans are not regulated by the CFTC or the NFA, even though Kalshi Prime itself is a registered futures commission merchant. The trading sits under federal oversight. The lending behind it does not. BitGo Bank and Trust answers to the OCC as a trust bank, so the custody piece is supervised even where the credit is not.

What to watch

KalshiEX started perpetual futures on May 29, 2026, beginning with crypto, and now lists 19 crypto pairs alongside real-world assets like gold and a Kalshi 500 perpetual index. Kalshi's move into crypto perpetuals has already drawn a court fight over who can block the contracts. In September its clearinghouse, Kalshi Klear, asked the CFTC to allow margin on certain event contracts, and the firm has pushed for perpetual-style contracts on oil and US stocks. A separate deal will bring Kalshi's perpetual futures to Webull customers from November. Watch whether rival US venues copy the crypto-collateral model, and whether regulators treat a registered broker lending through an unregulated affiliate as a gap worth closing.