- Coinbase is all set to venture into lending space by launching a new borrow feature for its customers.
- The new “Borrow” feature is now on the waitlist and is set to go live in the fall. Currently, it is licensed to provide lending services for customers in 17 states
- Coinbase has plans to explore more crypto assets in the future along with support in more states.
Aimed at best crypto investing experience for users, Coinbase, a major US cryptocurrency has provided several features like market stats for tradable assets and support 24 assets for trading so far. Now, it is all set to venture into lending space by launching a new borrow feature for its customers.
On Wednesday, Coinbase announced that this feature will allow customers to borrow as much as 30% in cash against their bitcoin holdings on the exchange of up to $20,000 per customer. As for interest rates, the exchange would charge a fixed annual rate of 8% for the maximum repayment period of one year.
Expanding Crypto Into Lending Space
Coinbase’s new project is in response to the situation of many customers who are in a dire need for expenses like home renovations or car repairs and neither want to sell off their crypto prematurely nor take out high-interest loans with high APR. This gives customers even more control over their crypto investments while offering secure access to cash at same time. Customers who are eligible don’t have to fill out a lengthy application or go through a credit check and would be able to get cash within 2-3 days.
Thorstem Jaeckel, Coinbase Product Manager stated that the service is an alternative to traditional high-interest personal loans. The new “Borrow” feature is now on the waitlist and is set to go live in the fall. Currently, it is licensed to provide lending services for customers in 17 states. Starting with bitcoin, Coinbase has plans to explore more crypto assets in the future along with support in more states.
Speculation into Reality
Unlike some crypto lenders who use collateral for investment opportunities, Coinbase will not reinvest the collateral elsewhere and will keep it at the exchange. Regarding this, Joseph Kelly, CEO and co-founder of crypto lender Unchained Capital stated that adding a lending product will be a good way for exchanges to hold customer funds at them.
The announcement comes as the theory of Coinbase preparing for an initial public offering continues to mount. This also contributed to the fact that demand for Bitcoin and cryptocurrencies has grown in the past few weeks. Coinbase’s low interest rate will allow it to operate in many states without the need for acquiring additional licensing. However, BlockFi stands as a key competitor for Coinbase as both firms are apparently looking to go public in the near future.
Crypto Lending Space’s Future is Bright
Similarly, bitcoin-friendly Square’s Cash App also announced that it was offering short cash to users ranging from $20 to $200 in 4 weeks time with 5% interest. It is planning to experiment with this new feature with 1,000 users while waiting for any feedback.
As customers use bitcoin-backed loans in different ways depending on their financial needs, the crypto lending scene is growing with more businesses coming up with different loan features. Several crypto lending platforms like Cred and Elquirex started offering services in the crypto lending space. Some other players in the lending space include Celsius, Nexo, and SALT Lending, among others.