February 12, 2025
Coinbase Creates New Crypto Lending Service for Large Investors

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Coinbase (COIN) has created a new crypto lending service in the US for institutional clients, helping to fill the void left by the explosion of firms such as Genesis and BlockFi.

The platform was quietly disclosed in a filing with the US Securities and Exchange Commission on September 1, which showed that $57 million had already been raised for the program.

According to a person familiar with the matter, customers can lend Coinbase money – mainly crypto assets – and receive collateral greater than the value of the loan. This type of overcollateralization acts as protection against disaster.

Coinbase could then turn around and offer secured loans to institutional trading customers — similar to the prime brokerage service provided by banks in traditional finance, the person in the know said.

Genesis and BlockFi offer similar lending services in the US, but they suffered massive losses last year that forced them to file for bankruptcy in whole or in part.

The new service is separate from the controversial Lend program that Coinbase canceled in 2021. This was imposed on retail customers, and SEC officials objected. This latest one is geared towards lending service institutions, which means regulation is less onerous – presuming large investors have the sophistication to handle it.

“With this service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that is eligible for Regulation D exemptions,” a Coinbase spokesperson said in a statement. “Coinbase is working to update the financial system created over 100 years ago, leveraging crypto to provide people with greater economic freedom and opportunity. To further this objective, Coinbase is committed to providing the most trusted crypto products. And building services, and supporting other builders to bring 1 billion people into crypto.”

Source: finance.yahoo.com

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