Coinbase Launches Crypto Lending Platform for US Institutions

Coinbase Launches Crypto Lending Platform for US Institutions – Coinbase, the cryptocurrency exchange, has introduced a crypto lending service tailored for institutional investors within the United States. This move is reportedly aimed at seizing opportunities in the crypto lending sector following significant market setbacks. 

According to a Coinbase spokesperson, this institutional-grade crypto lending platform is now available to U.S. investors as an extension of Coinbase Prime, their existing offering. “Coinbase is launching a digital asset lending program for its institutional Prime clients,” the representative said.

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Adding: “With this service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that qualifies for a Regulation D exemption.” As per a submission to the U.S. Securities and Exchange Commission, the lending program initiated by Coinbase has garnered $57 million in investments from its customers since the initial sale on August 28th. 

By September 1st, the offering had garnered interest from five investors. The new product comes in line with Coinbase’s commitment to “update the financial system that was built over 100 years ago, leveraging crypto to provide people with more economic freedom and opportunity,” a spokesperson for Coinbase the noted. Coinbase has introduced a new crypto lending product following the suspension of new loan issuance on Coinbase Borrow in May 2023. 

This program enables users to borrow up to $1 million using Bitcoin as collateral. The institutional initiative is managed by Coinbase Credit, the same entity overseeing Coinbase Borrow. This development comes after the U.S. SEC accused Coinbase of offering and selling unregistered securities related to its crypto staking services, which allow users to earn yields by lending their crypto to the platform. 

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Coinbase strongly refuted these allegations. Consequently, Coinbase had to pause its staking program in California, New Jersey, South Carolina, and Wisconsin during the legal proceedings. The crypto lending industry faced a significant crisis last year, marked by the bankruptcy of major companies like BlockFi, Celsius, and Genesis Global due to liquidity challenges caused by the 2022 bear market. Some crypto enthusiasts argue that the lending sector must learn from these failures and address issues related to short-term assets and liabilities.

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