Leading cryptocurrency exchange Coinbase has created a new lending service for U.S. institutional investors, according to a Bloomberg report on September 5.
Coinbase Raises $57M for New Lending Program
Citing a recent filing with the U.S. Securities and Exchange Commission (SEC), the report stated that the crypto exchange has already secured $57 million for the lending program from customers of its Prime service. Coinbase Prime is an integrated platform that provides institutions with trading and custody services.
The newly created program will allow institutions to lend their digital assets to Coinbase, which will lend to US-based institutional clients.
“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 said in a statement.
Notably, this service was previously offered in the U.S. by once-prominent industry lenders, including Genesis Global and BlockFi. However, the duo later suffered massive losses and filed for bankruptcy, which stemmed from last year’s market crisis.
Not the First
Meanwhile, this is not Coinbase’s first time to offer a lending program in the U.S. In May, the cryptocurrency exchange discontinued the issuance of new loans through Coinbase Borrow. This product allowed retail investors to take out fiat loans of up to $1 million using Bitcoin as collateral. According to the Bloomberg report, the new institutional lending program will be operated through Coinbase Credit, the same entity that operates Coinbase Borrow.
The latest development comes a few months after the SEC sued Coinbase, alleging that the company’s prime brokerage and staking programs violated federal securities laws. In response, Coinbase asked a federal judge to dismiss the lawsuit, arguing that the case falls outside SEC’s “delegated authority” because the platform does not offer securities.
Shortly after the SEC’s lawsuit, the exchange was forced to halt its services in four U.S. states, including California, New Jersey, South Carolina, and Wisconsin.
