Coinbase, a popular cryptocurrency trading platform, is once again offering Bitcoin collateralized loans within the U.S., enabling users to secure loans using their bitcoin holdings as security.
For US account owners, with the exception of those residing in New York, our latest product offering enables you to secure a loan worth up to 100,000 USD Coins (USDC), using your Bitcoin (BTC) as security. However, please note that only Bitcoin stored within Coinbase can be used as collateral for this loan.
Coinbase has partnered with Morpho Labs, a decentralized finance platform, to streamline their lending operations. This lending activity will take place exclusively within Base, Coinbase’s Ethereum layer-2 network.
Max Branzburg, an executive at Coinbase, shared with CryptoMoon that the latest product reflects the company’s dedication to financial liberty. He stated further that crypto-secured loans empower their clients to utilize their Bitcoin for more purposes, and this is being executed directly on the blockchain.
A representative from Coinbase explained to CryptoMoon that their platform offers an effortless method for users to tap into the lending market, but it’s important to note that they themselves do not manage or issue the loans.
As a financial analyst, I can share that users will have the advantage of accessing competitive interest rates without incurring any fees from Coinbase or undergoing credit checks. Moreover, they are empowered to set their own repayment schedules, enjoying flexible loan repayment terms.
Coinbase has entered the Bitcoin lending market for a second time, with the introduction of a new product line in May 2023. Previously, users could borrow cash using their Bitcoins as collateral through the Borrow program, but this service was discontinued on November 20, 2023, after it had been announced earlier that year.
Demand for Bitcoin-backed loans heats up
Bitcoin-backed loans enable owners to borrow money while keeping their bitcoin assets intact, which is beneficial for those aiming to preserve their wealth and sidestep substantial tax liabilities by not having to sell their holdings.
Using assets as collateral for loans is a long-standing method employed by affluent families. Often referred to as “continuous borrowing,” this approach enables the wealthy to secure loans that are backed by their assets, potentially indefinitely.
Due to an increase in the worth of Bitcoin, numerous initial investors are now enjoying substantial financial gains. This trend may lead to a significant expansion in demand for loans secured by Bitcoins over the next few years.
As a researcher delving into the realm of digital finance, I’ve come across an intriguing projection: Based on HFT Market Intelligence findings, the market value of Bitcoin-backed loans could potentially surge from a staggering $8.5 billion in 2024 to an astounding $45 billion by 2030. This growth trajectory suggests a significant expansion and potential transformation within our digital financial landscape over the next decade.
The increasing acceptance of Bitcoin is motivating additional financial organizations to delve into the cryptocurrency lending sector. For instance, Ledn, a Bitcoin lending protocol, revealed to CryptoMoon that prominent institutions are transitioning from exchange-traded funds and starting to engage in crypto lending operations.
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2025-01-16 19:10