Courtesy: https://www.coinbase.com/
- Coinbase Exchange has launched a lending product for institutional investors.
- The program seeks to fill the void created by bankrupt firms like BlockFi and Celsius Network.
American cryptocurrency exchange Coinbase has launched a new lending offering dubbed Coinbase Credit for institutional investors in the United States. The publicly traded company is clearly taking advantage of the vacuum left by certain top crypto lenders including BlockFi and Genesis Global who suffered bankruptcy from the bear market of last year. The collapse of these lenders reduced borrowing options for investors and eventually left the lending sector in chaos.
A filing with the United States Securities and Exchange Commission (SEC) shows that customers of Coinbase’s institutional-based trading platform Prime have plunged in up to $57 million in the lending program.
Markedly, Coinbase Prime is a comprehensive trading platform for institutional investors to trade cryptocurrencies. It was launched in 2021 to handle orders that are typically larger compared to those of Coinbase’s retail customers.
With this new lending offering, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that qualifies for a “Regulation D exemption.”
Coinbase Had an Earlier Foray into Crypto Lending
It is worth noting that this is not Coinbase’s first time in the lending ecosystem. The exchange previously operated a lending program known as Coinbase Borrow which allowed individuals to receive loans of up to $1 million against as much as 30% of their Bitcoin (BTC) holdings.
However, the program encountered some hiccups and was forced shut down earlier this year. According to a representative for the firm, the decision to shut down the Coinbase Borrow program was made after an assessment of Coinbase’s selection of public-facing products. Consequently, the assessment showed a decline in interest amongst customers of the offering.
Unlike Coinbase Credit which is designed to cater for institutional investors, the Coinbase Borrow program was dedicated to retail investors.
Generally, it looks like Coinbase is expanding its reach and offerings because the news of Coinbase Credit came on the same day that the exchange announced its $180 million bond buy-back program. Noteworthy, this initiative was first introduced with a set cap of $150 million but the not-so enthusiastic response gotten made the company to expand the total amount allocated for repurchasing 2031 bonds to a significant $180 million.
Meanwhile, Coinbase and the SEC are still at each other’s throat over regulatory clarity on unregistered securities and many other topics. In June, the regulator sued the crypto exchange for operating as an unregistered broker and exchange operator, thereby violating regulatory requirements.
The SEC also cracked down on Coinbase’s Staking-as-a-Service program which allows users to provide their coins to Coinbase to earn yields or rewards for securing blockchain networks. In the meantime, no verdict has been reached concerning the Coinbase vs SEC lawsuit but it is believed that the outcome of Ripple’s legal battle with the regulator will be pivotal in its case.
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