Digital asset exchange Coinbase will be offering cryptocurrency loans to institutions in the United States. With the new service, the leading U.S. crypto trading platform seeks to fill the market gap opened by the collapse of companies like Celsius, Genesis, and Blockfi.
Crypto Exchange Coinbase Starts Offering Crypto Loans to Institutions
Cryptocurrency exchange Coinbase has launched a crypto lending service targeted at large institutional investors in the U.S., Bloomberg reported, noting that the move is aimed at capitalizing on the void left by the bankruptcies of major platforms in this sector.
According to a filing with the U.S. Securities and Exchange Commission (SEC), $57 million have been invested already in the lending program by customers of Coinbase Prime, the exchange’s brokerage platform that allows institutional players to execute trades and custody assets.
“With this service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that qualifies for a Regulation D exemption,” the crypto company said in a statement on Tuesday. The exchange can then use borrowed funds to offer loans to other institutions.
Coinbase’s new business initiative comes in the aftermath of last year’s high-profile collapses of lenders Celsius Network, Blockfi, and Genesis Global. The string of failures resulting from risky bets eventually limited borrowing and leverage options for investors.
The largest American crypto exchange has previous experience with lending through a service for retail investors, Coinbase Borrow, but it stopped issuing such loans in May. The entity that operated that service, Coinbase Credit, will manage the new institutional program as well.
Like other crypto companies, including the world’s biggest digital asset exchange Binance, Coinbase has been targeted by U.S. regulators in an ongoing crackdown on the industry that has affected crypto business in the United States.
In June, the SEC charged Coinbase with unregistered offers and sales of securities in connection with its staking-as-a-service program. The latter allowed users to give their digital coins to the exchange and earn yields to secure blockchain networks.