Coinbase Gearing For Cash Loans With BTC Collateral Service This Fall

Coinbase stands as one of the giants within the crypto exchange space, and it seems that it will now start venturing within the crypto lending space, as well. This move will put it in direct competition with players already in the industry, such as BlockFi.

17 US States With Plans Of Expansion

Coinbase, regarding this subject, explained that customers within a select number of US states would be capable of borrowing cash, using Bitcoin (BTC) as a form of collateral. The plan stands that Coinbase will support 17 states at launch. These states are Arkansas, Alaska, Florida, Connecticut, Illinois, Georgia, New Hampshire, Massachusetts, North Carolina, New Jersey, Texas, Oregon, Nebraska, Virginia, Wisconsin, Utah, as well as Wyoming.

This new feature, aptly called “Borrow,” is currently on a waitlist. As it stands now, it’s scheduled to go live in Fall, according to a Coinbase spokesperson. Coinbase also made it clear that it’s planning on using other forms of crypto-assets as collateral in the future, but will start out with Bitcoin. The same goes for the amount of US states it will offer the service on, stating that the exchange is actively pursuing licenses across more states of the US.

Terms And Conditions Apply

As for the exact details of these loans, Coinbase will be capable of offering cash loans that are equal to 30% of their Bitcoin holdings. However, there is a maximum limit of $20,000. The interest rates themselves stand at a fixed annual rate of 8%, with the maximum repayment period being one year in total.

The Coinbase spokesperson regarding the matter explained that all customers would maintain this 8% interest rate offered when the loan was taken, doing so for the loan term’s duration. However, it has been warned that Coinbase will review the rate over time, doing so based on various factors such as market conditions.

Some Key Differences To Others

Further stipulations about the matter explained that customers have no need to fill out application forms, or go through a credit checked. Furthermore, borrowers will be capable of receiving their loans in two to three days’ time.

Another critical thing to take in mind, is the exchange stated that it wouldn’t’ reinvest the collateral elsewhere. As such, the Bitcoin will be kept at the exchange itself. This stands in contrast to other forms of practice, that either invest the deposits in perpetual swaps, or rehypothecate the collateral.