Crypto Lending Services Arrive on Coinbase For Institutional Investors

7 Sep 2023 by Rory Kejzerko 1 min read

Coinbase is back to give it another crack at offering crypto lending services. This time around, the exchange has launched a lending platform catered towards large institutional investors.

The platform will allow any of its US-based 9,000+ institutional clients to lend Coinbase money and receive collateral exceeding the value of the loan. Of course, these transactions will largely take place within the realm of crypto, with the overcollateralization mechanism being in place to mitigate the risks of loan defaults.

Intuitively, Coinbase will also be brokering the deals in this scenario, where again, the funds will be available for borrowing to any of its US-based institutional clients.

The new platform differs from its 2021 retail-focused predecessor which the SEC eventually denied. This is because it’s presumed that large and savvy institutionalised investors won’t require arduous regulation frameworks when navigating across the realm of crypto loans. And for now, this presumption has appeared to ring true, as a successful $57 million has already been raised by the program.

The new lending service comes as part of Coinbase’s mission to onboard 1 billion people into crypto - a rite of passage in which the platform believes will provide them ‘more economic freedom and opportunity’.

However with such ambition also comes risk, as was felt by the likes of fellow crypto entities BlockFi and Genesis, who both experienced huge losses and bankruptcy filings after entering the crypto lending game.

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