The budding market for cryptocurrency-backed loans met its first big stress test this week as bitcoin (BTC) dropped 40 percent and lenders demanded additional collateral from borrowers.

In the last day, Genesis Capital called an additional $100 million of collateral from its selective pool of about 40 clients, CEO Michael Moro said Friday afternoon. Rival Celsius Network – which lends to 225 institutions, making up up a loan book of $400 million to $600 million at any given time – has seen margin calls in the hundreds of millions, according to CEO Alex Mashinsky. 

Meanwhile, Nexo’s co-founder Antoni Trenchev said some customers have repaid loans while it has liquidated other clients’ collateral, the equivalent of foreclosing on a home mortgage. And BlockFi reported in a blog post that it made margin calls on its dollar-denominated loan book, with some liquidations, but declined to comment further. 

“As of five minutes ago, everyone who needed to post collateral has,” Moro said. “We’ve had zero liquidation events. … What we have done to augment our lending is we have not made any additional loans in the last few days.” 

In the past year, crypto lending activity has mushroomed, as some holders sought to earn a yield on their assets, others sought to raise cash without selling their coins and market makers borrowed to fill orders quickly. The phenomenon could potentially improve liquidity and price discovery for crypto assets but it also has introduced systemic risks.   

Read more: Crypto Lending 101

Now, Genesis doesn’t plan to make any loans that are collateralized less than 100 percent until the market calms down, Moro said. 

While Genesis is still trying to figure out what interest rates should look like in the volatile environment, the unit of Digital Currency Group is raising collateral requirements on loans from around 105 percent to between 110 and 120 percent for loans backed by bitcoin, which make up the majority of its loan book. If volatility doesn’t subside, collateral levels could rise further, to anywhere between 130 and 150 percent, as underwriting standards continue to tighten. 

As the market dropped, Moro said demand shifted from fiat loans to bitcoin loans as traders looked to arbitrage the difference between bitcoin’s spot and futures prices. At sister company Genesis Trading, Moro said, only about 60 percent of clients were selling while 40 percent were still buying.

Given the turmoil, “I would have expected it to be 80/20 or 90/10,” he said. 

Celsius also raised collateral standards after Thursday’s rout, but Mashinsky claimed it was the “best day ever” for the company as it “loaned more than ever and charged the most interest” than it ever has. 

For example, loans on ether now carry an eye-popping interest rate of around 260 percent compared to 15 to 20 percent under normal circumstances and 4 or 5 percent in the calmest of times, Mashinsky said. 

As Celsius grows, however, it plans to tighten the limits on credit lines it offers, Mashinsky said.

Nexo is holding the launch of a product that would allow users to earn interest on their crypto, Trenchev said. (The company only offers crypto-collateralized fiat loans and interest on fiat and stablecoins.)

“We were going to launch two weeks from now,” Trenchev said. “But we have to wait for this to play out, before we feel confident to launch.” 

Trenchev said he’s confident that demand for fiat loans will hold steady as bitcoin seems to have bottomed around $3,867 and he does not plan to change interest rates. Nexo’s loans are typically collateralized between 200 and 500 percent, he added.

“The beauty of collateralized loans is you don’t have to worry about the underwriting process that much,” Trenchev said. “I would argue that digital assets are the best collateral – better than a penthouse on Fifth Avenue. You might have a steady price situation, but with digital assets you have instant liquidity.”