Coinbase Introduces New Lending Service for Crypto to Institutional Players
In Brief
Coinbase has launched a groundbreaking crypto-lending platform in the United States with a strong focus on institutional clients.
The details regarding this new platform surfaced quietly due to a filing with the U.S. Securities and Exchange Commission on September 1.
Cryptocurrency exchange Coinbase a new crypto-lending service was recently launched in the United States, focusing mainly on institutional clients.
The launch of this service became known through a filing with the U.S. Securities and Exchange Commission filing dated September 1, which disclosed an initial funding of $57 million allocated to support the crypto-lending service.
This new platform allows institutional investors to offer capital to Coinbase, primarily in the form of cryptocurrencies. In return, they receive collateral that significantly exceeds the loan amount, providing a strong safety net against any potential risks.
Coinbase subsequently employs these funds to extend secured loans to its institutional trading partners, mimicking the prime brokerage services that are a staple of traditional financial institutions.
It's important to mention that before this, Coinbase had a lending initiative called 'Lend' aimed at retail customers, but it ran into regulatory hurdles and was ultimately discontinued in 2021.
Additionally, it's noteworthy that other crypto lending platforms like Genesis and BlockFi previously offered similar services in the U.S. However, both of these companies faced major financial issues last year, resulting in either bankruptcy or significant downsizing. Therefore, Coinbase's latest endeavor aims to fill the gap left by the troubles of Genesis and BlockFi.
"Coinbase aims to modernize a financial framework that's over a century old, harnessing the power of crypto to enhance economic freedom and opportunities for people,\" a spokesperson from Coinbase commented. \"In pursuit of this mission, we're committed to developing the most reliable crypto products and services while also empowering other innovators to usher in a billion users into the world of crypto.\"
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