Coinbase Revolutionizes New Crypto Lending Service For Institutions

Key Points:

• Coinbase launches a crypto lending service for US institutional investors.
• Institutional clients can lend digital assets to the exchange under standardized terms.
• This move marks the exchange’s reentry into lending, focusing exclusively on institutional clients.

Coinbase is making its move into the crypto lending space, targeting US institutional investors. The cryptocurrency exchange giant aims to fill the void left by the collapse of firms like BlockFi and Genesis Global, as reported by Bloomberg.

According to a filing submitted to the SEC on September 1, Coinbase has applied for exemptions for this service through its subsidiary, Coinbase Credit, Inc., listing CFO Alesia Haas as a related individual.

The service will offer institutions the option to lend digital assets to the exchange under standardized terms, qualifying for a Regulation D exemption.

Its plan is to primarily source crypto assets from its customers and then lend them to institutional trading clients. Already, customers using Coinbase Prime, the exchange’s full-service prime brokerage platform, have invested $57 million in the lending program.

This move marks the exchange’s reentry into lending, following the suspension of its retail-focused Coinbase Borrow service in May. Unlike its previous retail lending program, this new initiative is aimed squarely at institutional clients, akin to the traditional prime brokerage services offered by banks.

Genesis and BlockFi had previously offered similar lending services in the US but experienced significant losses last year, leading to bankruptcy proceedings.

It’s worth noting that Coinbase has encountered regulatory challenges in the past, including a recent SEC charge related to its staking-as-a-service program. However, the exchange has also achieved regulatory milestones, such as securing approval to offer cryptocurrency futures to US retail customers.

While the exchange had previously experimented with various lending programs, this latest institutional-focused venture positions the exchange to serve the evolving needs of the crypto industry and its institutional players.

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