Coinbase Launches Crypto Lending Service for Institutional Investors
Cryptocurrency exchange Coinbase has launched a new crypto-lending service in the United States. The new initiative primarily targets institutional clients.
The new platform quietly came to light through a U.S. Securities and Exchange Commission filing on September 1.
Cryptocurrency exchange Coinbase has launched a new crypto-lending service in the United States. The initiative primarily targets institutional clients.
The new platform quietly came to light through a U.S. Securities and Exchange Commission filing on September 1. In the document, the company revealed an initial funding of $57 million for the crypto-lending service.
With the new offering, institutional clients have the opportunity to lend capital to Coinbase, predominantly in the form of cryptocurrency assets. In return, individuals receive collateral that exceeds the value of the loan, serving as a robust safeguard against potential setbacks.
Coinbase then utilizes these funds to provide secured loans to institutional trading clients. This mirrors the prime brokerage services commonly offered by traditional banks in traditional finance.
On a side note, Coinbase used to have a “Lend” program that was geared toward retail customers. However, it drew objections from SEC officials and faced cancellation in 2021.
It’s worth noting that crypto lending firms Genesis and BlockFi also previously offered similar lending services in the United States. However, last year, both companies experienced substantial losses, which led to their bankruptcy or partial bankruptcy. So, Coinbase’s initiative aims to bridge the void created by the challenges faced by Genesis and BlockFi.
“Coinbase is working to update the financial system that was built over 100 years ago, leveraging crypto to provide people with more economic freedom and opportunity,” said a Coinbase spokesperson. “To advance this purpose, Coinbase is building the most trusted crypto products and services and supporting other builders to bring 1 billion people into crypto.”
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