• Kalshi Prime and BitGo (BTGO) have partnered to allow traders to borrow dollars against Bitcoin, Ethereum, and stablecoins without selling their holdings.
  • The loans are used to fund margin on Kalshi's futures exchange, with collateral held in segregated custody at BitGo Bank & Trust.
  • The arrangement adds leverage, meaning pledged crypto may be liquidated if market moves go against the borrower.

A New Leverage Tool for Crypto Traders

Kalshi Prime, the futures commission merchant arm of prediction market platform Kalshi, and BitGo, the publicly traded digital asset infrastructure provider, announced on October 21 a new product that lets eligible traders borrow dollars against their cryptocurrency holdings. The service, branded HODL Margining, allows customers to pledge Bitcoin, Ether, and stablecoins that comply with the GENIUS Act as collateral while retaining their exposure to those assets. The borrowed dollars can then be used to meet margin requirements on Kalshi's main exchange, including perpetual futures contracts.

According to details confirmed by Bloomberg, the lending is conducted through Kalshi Katalyst, an affiliate of Kalshi Prime, while BitGo Bank & Trust holds the pledged assets in a tri-party collateral management arrangement. The structure keeps the collateral outside the trading venue, a design that has become increasingly common as exchanges seek to reduce counterparty risk. Other custodians may be added in the future, according to people familiar with the matter.

The appeal for traders is clear: they can access liquidity without selling their crypto, potentially deferring capital gains taxes and maintaining their market positions. Jeff Bandman, who leads Kalshi Prime, said the product is aimed at investors who are reluctant to part with their Bitcoin as well as businesses in Latin America that operate with dollar stablecoins.

Leverage Cuts Both Ways

The arrangement, however, introduces a double-edged sword. Borrowers retain their crypto exposure but also take on a leveraged trading position. If the value of the pledged collateral falls sharply, they could face margin calls or forced liquidation of their assets. Segregated custody protects the assets from being commingled with exchange funds, but it does not shield them from market risk.

"The central trade-off is leverage," said one market participant who reviewed the structure. "Customers are effectively doubling down on crypto exposure while financing a separate trade." The specific terms of the loans—including interest rates, loan-to-value ratios, collateral haircuts, and liquidation thresholds—have not been disclosed, making it difficult to assess the true cost and risk for borrowers.

Kalshi's move into crypto-backed lending comes as the company expands beyond its roots in event contracts. The privately held exchange, which reached a $22 billion valuation after a $1 billion funding round in May, has been pushing into regulated futures. Its CEO, Tarek Mansour, has said the broader dispute over prediction market jurisdiction could reach the Supreme Court, though that litigation concerns sports contracts and is separate from the new loan product.

BitGo's Expanding Role in Crypto Finance

For BitGo, the partnership is the latest in a series of moves to expand its financing and infrastructure offerings. The company, which began trading on the NYSE under the ticker BTGO in January, reported second-quarter revenue of $4.329 billion, up nearly 80% year over year, but posted a net loss of $19 million as direct costs nearly matched revenue. The firm has recently acquired NYDIG's institutional trading business and appointed a new chief compliance officer and head of research.

BitGo's custody arm provides the backbone of the new lending arrangement, holding collateral in segregated accounts. The company also announced a separate research unit, BitGo Labs, focused on AI and crypto applications, but that initiative is not part of the margin loan structure.

The launch also highlights the growing intersection of crypto and traditional finance. Kalshi's use of a registered futures commission merchant and a federally chartered trust bank for custody reflects a regulatory posture that could appeal to institutional investors. Stablecoin eligibility is explicitly tied to compliance with the GENIUS Act, a nod to the evolving regulatory framework for digital assets.

What's Next

Industry observers will be watching for the specific terms of the loans, which could determine whether the product gains traction. Without details on pricing and risk controls, it is unclear whether the economics will attract enough borrowers to make a material contribution to Kalshi or BitGo. Both companies declined to comment on the terms.

For now, the partnership offers a new way for crypto holders to access dollar liquidity while keeping their positions intact. But as with any leveraged product, the potential for amplified losses during market downturns remains a key risk. Traders who pledge their crypto may find that their HODL strategy comes with hidden costs.

Correction: An earlier version of this article misstated the entity providing the loans. Lending is conducted by Kalshi Katalyst, not BitGo.