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The crypto lending market took a severe hit last year after the collapse of big players like Genesis Global, BlockFi, and others. Coinbase Global seems to capitalize on this void in the markets and has launched its own crypto lending service for US-based institutional investors.
As per the recent filing with the U.S. Securities and Exchange Commission (SEC), customers of the Coinbase Prime service have already invested more than $57 million in the lending program. Coinbase Prime is the exchange’s full-service Prime brokerage platform allowing institutions to execute trade and custody assets. In a statement on Tuesday, the crypto exchange said:
“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”.
The development comes on the same day that Coinbase announces its $180 million bond buy-back program. Coinbase initially introduced its bond buyback initiative with a set cap of $150 million. Initially receiving a tepid response, the company has opted to expand the total amount allocated for repurchasing 2031 bonds to a significant $180 million.
Coinbase and Crypto Lending
Coinbase has previously entered the lending space. In May, the company ceased offering new loans through a service that allowed individuals to borrow against their Bitcoin holdings, known as Coinbase Borrow, primarily catering to retail investors. The current institutional program operates under the same entity, Coinbase Credit.
Additionally, in June, the SEC filed charges against Coinbase related to its unregistered offer and sale of securities linked to its staking-as-a-service program. This program permitted users to delegate their coins to Coinbase to earn yields for securing blockchain networks. A coalition of U.S. states demanded that Coinbase discontinue its staking services in response.
Notably, several prominent crypto lending platforms, including Celsius Network, BlockFi, and Genesis Global, faced financial distress in the past year. These lenders engaged in high-risk strategies that didn’t yield favorable outcomes, resulting in a domino effect of failures that significantly reduced borrowing options and leverage for investors.
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