Coinbase Launches Crypto Loan Service for Major US Institutional Clients

Sep 08, 2023

Coinbase Global Inc. has introduced a new crypto lending service catering specifically to large institutional investors in the United States. This move aims to capitalize on the void left in the market following the collapse of companies like BlockFi Inc. and Genesis Global Holdco.

According to a recent filing with the US Securities and Exchange Commission, clients of Coinbase's Prime service have already allocated $57 million to the lending program. Coinbase Prime is a comprehensive prime brokerage platform that enables institutional clients to execute trades and securely store their assets.

In a statement released on Tuesday, Coinbase explained that institutions can now opt to lend their digital assets to Coinbase under standardized terms, within a product that qualifies for a Regulation D exemption.
It's worth noting that Coinbase has ventured into lending in the past. In May, the company halted its previous service, which allowed individuals to borrow against their Bitcoin holdings. This service, known as Coinbase Borrow, primarily targeted retail investors. The new institutional lending program operates under the same entity, Coinbase Credit.

In June, Coinbase faced legal challenges from the SEC, which accused the company of an unregistered offer and sale of securities in connection with its staking-as-a-service program. This program allowed users to delegate their coins to Coinbase to earn yields for securing blockchain networks. Additionally, several US states demanded that Coinbase cease its staking services.

The crypto lending space witnessed the high-profile bankruptcies of lenders like Celsius Network, BlockFi, and Genesis Global over the past year. These lenders took risky positions that did not yield favorable results, leading to a chain of failures that significantly limited borrowing and leverage options for investors.

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