Cryptocurrency exchange Coinbase has introduced a crypto lending service targeting institutional investors in the United States. The platform aims to seize an opportunity created by the significant challenges faced by the crypto lending market.
The new lending service is part of Coinbase Prime, designed to cater to institutional clients. A Coinbase spokesperson confirmed the launch, emphasizing that it is an institutional-grade cryptocurrency lending platform. The service institutions allows to lend their digital assets to Coinbase under standardized terms , complying with the Regulation D exemption.
According to documents filed with the US Securities and Exchange Commission (SEC), Coinbase customers have already invested $57 million into the program loan since its initial sale on August 28. As of September 1, the program had attracted five investors.
Coinbase has stated that these new products align with the company's mission to modernize the traditional financial system, leveraging cryptocurrencies to provide greater economic freedom and opportunities to individuals.
This move follows Coinbase Borrow's suspension of new loans in May 2023, which allowed users to borrow up to $1 million with Bitcoin collateral. The new institutional lending service will operate through Coinbase Credit, the same entity responsible for Coinbase Borrow.
Coinbase has faced regulatory challenges recently, with the US SEC accusing the exchange of offering and selling unregistered securities through its crypto service. This service enabled users to earn rewards by staking cryptocurrencies on the platform. Coinbase strongly contested the SEC 's allegations, disagreeing with the characterization of its staking services as securities.
The crypto lending industry experienced a significant crisis last year, marked by the struggles and bankruptcies of major companies like BlockFi, Celsius, and Genesis Global. These issues stemmed from a liquidity shortage resulting from the 2022 bear market. To prevent further collapses, some believe That the crypto lending industry must learn from these challenges and address issues related to short-term assets and liabilities.
