Coinbase Crypto Exchange to Launch Bitcoin-Backed Loans to US Clients
Shine Li Aug 13, 2020 06:34
Coinbase announced yesterday that it was going to offer Bitcoin-backed loans to their US customers, set to be in effect for fall of this year.
Coinbase announced yesterday that it was going to offer Bitcoin-backed loans to their US customers, set to be in effect for fall of this year.
Coinbase to Launch Bitcoin-Backed Loans
The new feature provided by the San-Francisco coin exchange will enable retail clients “to borrow fiat loans against as much as 30% of their Bitcoin holdings, in the fall.”
Being one of the largest and most reputable crypto exchanges in the world, this is big news and a move forward for the cryptocurrency industry. In order to be cleared for a Bitcoin-backed loan, Americans will simply need to fill out an application or go through a credit check, which constitutes a standard procedure when applying for fiat loans as well. Bitcoin-backed loans will take two to three business days to be processed and be cleared.
Speaking about the new project in an emailed statement, Senior Director of Product Max Branzburg elaborated and said that the Bitcoin (BTC)-backed loans could be employed in various ways. Depending on a client’s financial needs, the BTC loans could be redirected towards large expenditures such as house payments, car repairs, weddings, and much more. It can also be used to help “manage higher-interest personal loans or credit card debt,” he added.
The Bitcoin-backed product is only going to be available in 17 states for the time being, but Coinbase is working on license registration in other states and countries to expand its lending service. On Wednesday, a waitlist opened, with the following headline:
“Have you ever needed cash for something urgent, like a car or home repair? In the past, you might have sold Bitcoin to cover it and incurred a taxable gain or loss. Now you don't have to.”
Coinbase exchange stated that it won’t reinvest the collateral elsewhere. Instead, its strategy is to keep the BTC at the exchange, which is a protocol that differs from what crypto lenders usually do – rehypothecate the collateral.
The Future Looks Bright for Coinbase
Currently, Coinbase’s Bitcoin-backed loan is to be launched in these following states: Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin, and Wyoming.
Coinbase has been making power moves this year. The San-Francisco coin exchange is planning to launch a stock market listing this year, which would make it the first major US cryptocurrency exchange to go public.
