Strike does not provide tax advice. The tax treatment of bitcoin-backed loans depends on the rules and regulations that apply in your country or region. In many cases, receiving a loan using bitcoin as collateral is not itself considered a taxable event. However, certain actions related to the loan may have tax consequences, depending on your local laws.

Using bitcoin for payments:

If you choose to use bitcoin to make loan payments, this is considered a sale of your bitcoin.

• Monthly interest: If you choose to pay your monthly interest (for Monthly Payment loans) from your bitcoin balance, sufficient bitcoin will be automatically sold to cover the payment.
• Payment at maturity: If you choose to make your final payment (for either Monthly Payment or Payment at Maturity loans), sufficient bitcoin collateral will be sold on your behalf to cover your outstanding amount.

Collateral liquidations:

Involuntary sales of your bitcoin collateral, also known as liquidations, may also be treated as taxable events. These can occur in situations such as:

• Failure to make a payment: If you fail to make a loan payment, and the grace period expires, sufficient bitcoin collateral will be sold to cover the overdue amount.
• Unresolved margin call: If you fail to resolve a margin call in time, sufficient bitcoin collateral will be sold to return your LTV to the recovery threshold.
• Reaching the liquidation threshold: If your LTV reaches the liquidation threshold at any time, sufficient bitcoin collateral will be immediately and automatically sold to return your LTV to the recovery threshold.

If applicable, these sales or liquidations may be taxable events, depending on your country or region's laws. Strike loans are not reported to credit agencies and do not affect your credit score.

Strike does not provide tax advice. These FAQs are for informational purposes only and shouldn’t be considered tax advice or recommendations. Please consult a professional regarding the tax implications of buying and selling bitcoin.