March 27, 2024
Coinbase Launches Crypto Lending Service for U.S.
Latest Cryptocurrency News

Coinbase Launches Crypto Lending Service for U.S. Institutional Investors Amidst Market Challenges

Coinbase, a prominent cryptocurrency exchange, has introduced a crypto lending service tailored for institutional investors in the United States. Their goal is reportedly to take advantage of the significant setbacks witnessed in the cryptocurrency lending market.

Unannounced until now, Coinbase has quietly unveiled a high-level crypto lending platform called Coinbase Prime to cater to U.S. investors. This platform functions as a comprehensive prime brokerage service, facilitating institutional trading and asset custody.

The firm stated, “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.” According to a disclosure submitted to the U.S. Securities and Exchange Commission, as of August 28, Coinbase customers had invested a total of $57 million in the lending program, with five investors participating by September 1.

This new crypto lending service from Coinbase comes on the heels of the suspension of new loan issuance on Coinbase Borrow in May 2023. The original program enabled users to secure loans of up to $1 million using Bitcoin as collateral. The newly introduced institutional program operates under the umbrella of Coinbase Credit, the same entity overseeing Coinbase Borrow.

This development follows the U.S. SEC’s previous charges against Coinbase, alleging the offering and sale of unregistered securities in connection with its crypto-staking services, which permitted users to earn yields by lending their cryptocurrencies to the platform. Coinbase contested the SEC’s allegations, strongly opposing any claim that its staking services should be classified as securities.

During the legal proceedings, Coinbase had to halt its staking program in four states: California, New Jersey, South Carolina, and Wisconsin.

The crypto lending industry faced a severe crisis in the previous year, with major companies such as BlockFi, Celsius, and Genesis Global declaring bankruptcy due to a liquidity shortage resulting from the 2022 bear market. Some cryptocurrency enthusiasts argued that the crypto lending sector should learn from these collapses and address issues related to short-term assets and liabilities.

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