Coinbase Launches New Cryptocurrency Lending Service for Institutions
Coinbase has introduced a digital currency lending service aimed at institutional clients in the United States. The move comes after the bankruptcies of Genesis and BlockFi left a gap in the market. According to a filing with the Securities and Exchange Commission, the new service has raised $57 Million. Although while Coinbase has not provided numerous details about the platform, clients will be able to lend money to the exchange, primarily in the form of digital currency assets, and receive collateral worth more than the loan’s value. This over-collateralization approach is common in cryptocurrency lending services. The funds deposited with Coinbase will be used to make secured loans to institutional clients, similar to how banks provide loans in traditional finance.
Coinbase’s Past Attempts and the New Service’s Focus on Institutions
Coinbase had previously aimed to launch a lending program, but it was cancelled in 2021 due to objections from the SEC. The new lending service is different as it targets institutional investors who are more experienced and sophisticated. As a result, the regulations for this service are not as strict. Coinbase intends to update the financial system by leveraging cryptocurrency to provide economic freedom and opportunity. The company believes that supporting institutional lending is a step towards achieving this goal. Coinbase’s new service seeks to fill the void left by the bankruptcy of Genesis and BlockFi, catering to institutional investors in the cryptocurrency lending space.
Hot Take: Coinbase Fills the Gap in Cryptocurrency Lending for Institutions
With the bankruptcies of Genesis and BlockFi, there was a void in the market for digital currency lending services catering to institutional investors. Coinbase has now stepped in to fill that gap with its new lending service. By targeting institutional clients, Coinbase is positioning itself to provide lending services to experienced and sophisticated investors who can handle high-risk programs. The over-collateralization approach adopted by Coinbase intends to provide a safeguard for borrowers and protect against probable market volatility. As Coinbase continues to expand its suite of cryptocurrency products and services, it intends to bring more people into the world of digital currencies and provide economic freedom and opportunity.
Insa’s extensive background in the financial realm encompasses roles as a writer, trader, and personal finance coach. Her proficiency spans a wide spectrum, ranging from commodities and indices to forex and cryptocurrencies. Insa’s specialization lies in furnishing strategic investment advice tailored to the fintech investment niche.