Coinbase made a genius move this month as it capitalized on the giant gap left behind by major bankrupt exchanges; FXT, Genesis Global and BlockFi, seizing a golden opportunity in the distressed crypto lending market, having already raised an impressive $57million from investors.
While Coinbase has refrained from providing too much information on their power move and its features too soon, we do know that its clients can lend money primarily in the form of crypto assets to the exchange and receive collateral which is more valuable than the assets themselves, Coinbase can in turn loan the money to other institutional clients. The service is primarily offered to institutional clients in the United States and operates similarly to prime brokerage. According to our sources, the lending service is generally much safer and less subject to regulatory restrictions as that offered to retail clients.
Coinbase’ spokesperson had this to say in a statement:
“With this service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that qualifies for a Regulation D exemption. Coinbase is working to update the financial system that was built over 100 years ago, leveraging crypto to provide people with more economic freedom and opportunity. To advance this purpose, Coinbase is building the most trusted crypto products and services and supporting other builders to bring one billion people into crypto.”
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This marks yet another win for the exchange in recent times as the company had previously tried to establish such lending service back in 2021 but the SEC had been against it due to the high risk associated with the volatile crypto market. The future seems bright for the exchange as it presents a more sophisticated lending program that is sure to make a significant mark on the crypto world.