World-leading cryptocurrency exchange Coinbase has announced that it is planning to launch a service that loans client cash and accepts bitcoin as collateral.
Clients in some states in the United States would soon be able to loan fiat cash by using bitcoin as collateral. They would be able to borrow as much as 30% of their bitcoin holdings in their wallet, Coinbase disclosed.
US customers in select states will soon be able to borrow 30% of your Bitcoin holdings in cash. Eligible customers are invited to sign up on the waitlist for early access on Coinbase today.
— Coinbase (@coinbase) August 12, 2020
Currently, the San Francisco-based exchange is one of the largest and most regulated crypto exchanges to dive into the lending business, noting its a move that would put it directly in competition with other crypto industry players.
Notably, the newly added “Borrow” feature on the exchange is currently on a waitlist and is slated to launch in fall. Clients will not need to fill out an application or go through a credit check. While clients looking to take out a loan will be able to receive their funds in two to three days.
Max Branzburg, Coinbase’s head of product, stated that the new loan feature would provide clients with an alternative any time they need cash but do not want to sell their crypto prematurely.
Coinbase to include more crypto assets in the borrowing project
The crypto exchange said it’s currently examining more crypto assets to be listed to the borrowing scheme. In the nearest future. While, regarding its interest rates, Coinbase noted it would only charge a fixed annual rate. The interest rate would be 8% with a maximum repayment period of 12 months.
Also, it disclosed that there are plans to add support for more states in the US. “We are actively seeking licenses in the outstanding states in the US,” a spokesperson said. Additionally, noting that its low-interest rate will also enable it to offer services in many US states. That would otherwise require additional licensing to avoid usurious lending practices.
Currently, the product is available in only 17 states in the US. Namely: Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin, and Wyoming.
Other crypto-related firm venturing into the crypto lending scheme
Recently, several crypto firms have also been ventured into the digital currency lending space. Although, BlockFi currently tops the list of crypto firms offering lending services, several others are starting to show interest.
Also, cryptocurrency buying and lending firm Genesis has recently reported its highest ever loan originations since its launch. According to the firm, there has been a massive rise in demand for loans in the US. Noting that the number of borrowings in US dollars has risen. And constituted 37% of the company’s active loan portfolio in Q4 2019.
It is also worth noting that Bitcoin and cryptocurrencies, in general, have grown in the past few weeks. Notably, as a result of organizations seeking a global hedge. The DeFi space serving as an attractive investment venture for most.
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