Coinbase created a lending platform for the US
The cryptocurrency exchange announced the launch of a platform aimed at US investors
Leading cryptocurrency exchange platform Coinbase has taken a significant step by quietly introducing a cryptocurrency lending service aimed at institutional investors in the United States. This move is reportedly aimed at capitalizing on emerging opportunities in the cryptocurrency lending market.
Under the name of Coinbase Prime, the new cryptocurrency lending platform offers an institutional-grade solution for investors in the United States. Coinbase Prime, a full-service brokerage platform, enables institutions to trade and safeguard their assets.
“With this service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that meets the Regulation D exemption”, the firm said in its statement.
According to documents filed with the United States Securities and Exchange Commission (SEC), since its launch on August 28, Coinbase clients have already invested $57 million in this lending program, attracting five investors as of 1 of September.
This new Coinbase cryptocurrency lending product follows the suspension of issuance of new loans on Coinbase Borrow in May 2023. This program was designed to allow users to borrow up to 1 million using Bitcoin as collateral.
Importantly, this news comes several months after the US SEC accused Coinbase of allegedly offering and selling unregistered securities in connection with its cryptocurrency staking services, which allow users to earn returns by giving away their cryptocurrencies to the platform. Coinbase defended itself by arguing that it did not share the view that its staking services constitute securities.
The dispute led to the suspension of Coinbase’s staking program in four states: California, New Jersey, South Carolina, and Wisconsin, while legal proceedings continued.
This move by Coinbase comes at a time when the cryptocurrency lending industry is still reeling from last year’s crisis, which saw major companies like BlockFi, Celsius, and Genesis Global file for bankruptcy due to illiquidity caused by the bear market of 2022. Observers of the crypto space consider it critical that the cryptocurrency lending industry learns lessons from these crashes and addresses challenges related to short-term assets and liabilities.
K. Tovar
Source: Cointelegraph
(Reference image source: PiggyBank, Unsplash)
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