Asset-backed loans are not a new thing in the banking industry, but a Japanese bank called Abic Corporation is making headlines after it announced that it will be offering loans secured by Bitcoin (BTC).

The announcement which was made on Friday makes Abic Corporation one of the first firms to offer loans with cryptocurrencies as collateral. The Japanese bank was founded in 1973 and its head offices are located in Tokyo. Abic offers a variety of secured loans such as real estate and commercial loans.

The company pointed out in its statement that the number of companies that offer loans and ICOs have been on the rise and that some of those companies have been offering loans with cryptocurrencies as collateral. Abic stated that a bitcoin secured loan is a service that aims to provide loans to customers with Bitcoin as collateral. This means Bitcoin holders can get a loan with ease as long as they provide proof of ownership of a specified amount of the cryptocurrency. It is the first bank or company in Japan to provide loans in Japanese Yen with Bitcoin as collateral.

The fact that the firm is willing to give out loans with Bitcoin as collateral means it views the cryptocurrency as an asset rather than a cryptocurrency. Such an approach can be an advantage especially when it comes to taxation. For example, if the holder of the cryptocurrency sells the Bitcoin which was used as collateral, then only the gains after the sale will be taxed, meaning they will not have to pay a hefty tax. The progressive tax can be as high as 55 percent.

It is also advantageous in the sense that it allows clients to access funds without having to liquidate their digital assets. Abi has been urging its clients to take advantage of the crypto-secured loans to unlock a wide variety of uses such as tax payments and digital currency purchases. The loans will be provided to businesses and individuals as part of making sure that the service is all-inclusive.

The company will allow its customers to take Bitcoin-secured loans for up to five years with a minimum of one-month maturity. Borrowers will also have up to 60 installments through which they can repay the borrowed amount without any prepayment fees. There will also be a 20 percent annual delinquency charge. The company also announced that it will keep the cryptocurrency deposits on behalf of customers and that clients will also receive forked coins in case of a split during the duration of the loan.