Fold Holdings just acquired $150 million in borrowing power to expand its Bitcoin rewards credit card across the United States. The facility was provided by Encina Lender Finance and will give Fold a four-year runway to issue cards to a growing waiting list of people looking to accumulate money on everyday purchases.
The problem is that this is debt, not equity. Fold can aggressively expand its business without transferring a single share to new investors. For a company listed on the Nasdaq under the ticker FLD, that distinction is very important to existing shareholders.
How the transaction works
This credit facility is structured as a senior secured revolving line backed by consumer credit card receivables. In English, when a cardholder spends and accumulates a balance, future payments act as collateral for a loan.
This feature also includes uncommitted accordion functionality. That means Fold could potentially expand its borrowing capacity beyond $150 million if lenders’ appetite and performance warrant.
Fold’s credit card offers up to 4% Bitcoin rewards on eligible purchases, an additional boost on top of the 1.5% base rate. This puts it in a competitive position against traditional cashback cards, except that rewards are offered in Bitcoin rather than dollars or airline miles.
Fold’s track record and nationwide expansion
Fold is not a startup that makes promises in its pitch materials. The company has been in business since 2019 and has processed over $3.1 billion in transactions during that time. It paid out over $83 million in Bitcoin rewards to users.
Fold reported a 34% increase in revenue following the credit card launch.
The national rollout of the Fold Bitcoin Credit Card is happening in stages. The company is starting by issuing cards in bulk to users already on its waiting list.
Fold holds the distinction of being the first Bitcoin-listed financial services company. While going public gave the company access to the stock market, the new line of credit shows it can also tap into traditional debt markets.
What this means for investors
The non-dilutive nature of this transaction is a headline within a headline. Companies in growth mode often face the uncomfortable choice of increasing equity and diluting existing shareholders or maintaining internal cash flow and growing slowly. Fold found a third option by securitizing the debt. This is exactly how traditional credit card companies have funded growth for decades.
The fact that a traditional lender like Encina is willing to lend $150 million against Bitcoin reward credit card receivables says something about how the institutional lending market views crypto-related financial products. The collateral here is not Bitcoin itself. It’s consumer credit card debt, and traditional underwriters understand that deeply.
