Bloomberg News reports that the new lending service of Coinbase has a similar operating entity to that of Coinbase Barrow, which stopped the issuance of new loans in May.
Coin Base’s Crypto Lending Service Explained
Coinbase, the cryptocurrency exchange, rolled out a crypto lending service in the United States, especially for institutional investors. The same was reportedly undertaken to capitalize on the massive failures occurring in the lending services in the crypto market.
The institutional-grade crypto lending service Coinbase has launched targeting US investors is solely done as part of the prevailing Coinbase Prime offering. A Concerned spokesperson revealed the same on September 6th.
The representative added that the company is introducing the digital asset-lending program just for the Prime clients.
As per a filing with the SEC or the US Securities and Exchange Commission, Coinbase customers already have invested approximately $57 million in the lending program since August 28th, when the first sale took place. As of September 1st, five investors were attracted to the offering.
Coinbase’s new product
The new product of Coinbase is in line with the commitment that they made to updating the financial system. They developed it at least 100 years ago, thereby leveraging crypto or digital assets to provide people with greater economic freedom and opportunity. A spokesperson of Coinbase revealed the same.
The new crypto lending product being offered by Coinbase is following on close heels of Coinbase Barrows’ halt of new loan issuance initiated in May 2023.
What is the program model?
The program let users receive up to $1 million through a Bitcoin collateral. Coinbase Credit operates this newly introduced institutional program. On the other hand, Coinbase Barrow manage this.
Bloomberg News reports that the news comes a few months after the SEC alleged that Coinbase offered and sold unregistered securities while catering to clients with its crypto-starking services. These services will allow users to earn good yields when they give their crypto to the lending platform.
However, they vehemently opposed the US Securities and Exchange Commission’s allegations. Eventually, the lending platform had to halt the staking program in as many as four states. It includes California, New Jersey, Wisconsin, and South Carolina, with the proceedings moving ahead.
The crypto lending market faced many challenges last year. The main reason was crypto stalwarts like BlockFi, Genesis Global, and Celsius filed bankruptcy amidst a lack of liquidity. The main reason was a bear market that prevailed in 2022.
Many crypto enthusiasts revealed that the crypto lending industry should learn lessons from the meltdown and collapses. Most importantly, the industry must also be able to solve and resolve issues related to short-term liabilities and short-term assets.
