Coinbase Introduces Crypto Lending Service for Institutional Investors Amidst Industry Challenges
Summary:
Cryptocurrency exchange Coinbase has launched a new crypto lending service called Coinbase Prime for institutional investors in the United States. The program allows institutions to lend digital assets to Coinbase under standardized terms and has already attracted $57 million in investments. This move comes after the suspension of Coinbase Borrow and amidst the challenges faced by the crypto lending industry.
Coinbase, the popular cryptocurrency exchange, has introduced a new crypto lending service exclusively for institutional investors in the United States. This move is seen as an attempt to capitalize on the failures observed in the crypto lending market. The service, known as Coinbase Prime, functions as a comprehensive prime brokerage platform and allows institutions to execute trades and custody assets. Coinbase stated that institutions can opt to lend digital assets to the exchange under standardized terms that comply with Regulation D exemptions. Since its launch on August 28, the lending program has attracted $57 million from Coinbase customers, as disclosed in a filing with the U.S. Securities and Exchange Commission. Coinbase Credit, the entity responsible for managing Coinbase Borrow, operates this new institutional program. Despite a request for comment, Coinbase has not yet responded. This latest announcement follows the suspension of new loan issuance on Coinbase Borrow in May 2023, which previously allowed users to receive loans up to $1 million with Bitcoin as collateral. Notably, Coinbase faced charges from the U.S. SEC earlier this year for allegedly offering and selling unregistered securities in relation to its staking services. As a result, Coinbase had to pause its staking program in certain states. The crypto lending industry faced significant challenges last year, with prominent companies such as BlockFi, Celsius, and Genesis Global going bankrupt due to a lack of liquidity exacerbated by the bear market in 2022. Consequently, industry experts argue that the crypto lending sector must address issues related to short-term assets and liabilities to avoid repeating past failures.
Published At
9/6/2023 10:29:41 AM
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