Coinbase secures its first Bitcoin-backed loan from Goldman Sachs

The largest US cryptocurrency exchange Coinbase has secured its first Bitcoin-backed loan from Goldman Sachs. Bloomberg reports.

“Coinbase’s work with Goldman is the first step in recognizing digital assets as collateral, which strengthens the bridge between fiat and cryptocurrency economies,” said Coinbase Institutional head Brett Teipel.

She did not disclose the terms of the deal.

In late April, a representative of the investment bank reported a loan that had been issued backed by digital gold, but did not name the borrower.

According to Matthew Ballensweig, managing director of crypto brokerage Genesis, such borrowers typically place Bitcoin at a loan-to-value ratio of 40% to 60%. The collateral is held by a qualified custodian. The lender provides the loan in dollars at an agreed rate.

“Repayment terms and other conditions may vary, but overall this is a simple structure for bringing institutional lenders to the market,” Ballensweig noted.

Genesis has already structured similar loans with crypto-friendly banks such as Signature and Silvergate, Ballensweig added.

As of the end of 2021, Coinbase held cryptocurrency assets worth $566 million (including $183 million in Bitcoin), according to the firm’s annual report. Cash and cash equivalents stood at $7.1 billion.

Arca analysts suggested that the loan deal with the crypto exchange was a test for the bank, as it has seen strong demand for such transactions.

Earlier, in 2020, Coinbase itself announced a lending service in fiat backed by Bitcoin.