New Coinbase Loan Service Lets Users Borrow Money Against Bitcoin Holdings
Cryptocurrency exchange Coinbase Inc. enters the lending market with an option for some US customers to borrow money against their bitcoin holdings.
The loans will allow customers to borrow up to 30% cash against their bitcoin holdings on the stock market, up to $ 20,000 per customer. Interest on loans will be charged at 8% with terms of one year or less. Eligible customers won’t need to complete a lengthy application or undergo credit checks and can sign up with just a few clicks to get cash within two to three days.
Coinbase offers the service as an alternative to traditional high interest personal loans. “We hear from customers that they need money for expenses like home renovations or car repairs, but they don’t want to prematurely sell their crypto or take out high interest loans that might come with it. an APR of 20% and above, ”said Thorsten Jaeckel, product manager at Coinbase. said in a blog post today. “With wallet-backed loans on Coinbase, customers can quickly borrow money from their Coinbase accounts.”
According to Coindesk, Coinbase will not reinvest the collateral elsewhere and will hold the bitcoin on the exchange, unlike some crypto lenders who use the collateral for investment opportunities.
The service is currently available to customers in Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin and Wyoming, states in which Coinbase is licensed to provide a lending service. The company is seeking licenses in other states to expand the service in the future.
The announcement comes as speculation continues to mount that Coinbase is gearing up for an initial public offering later this year or early next year. The first report has arrived in July with other speculations in the Last week.
The path that Coinbase can take to go public remains open to speculation. Louis Lehot, founder of L2 Counsel, told Bloomberg Law August 11 that given the valuation of the company, a direct listing makes more sense than a traditional public offering.
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