Cryptocurrency exchange Coinbase has announced a fiat-backed lending service collateralised by Bitcoin. The service will be available to customers in 17 U.S. states.
US customers in select states will soon be able to borrow 30% of your Bitcoin holdings in cash. Eligible customers are invited to sign up on the waitlist for early access on Coinbase today.
Learn more here: https://t.co/2cTkGyxLEc pic.twitter.com/MrL5r4TyPf
— Coinbase (@coinbase) August 12, 2020
At launch, the maximum loan per client will be $20,000. The amount that can be borrowed will be limited to 30% of the Bitcoin on the balance.
The maximum loan term will be 12 months, with a fixed annual rate of 8%. Coinbase says the offer is attractive against current alternatives, which sometimes exceed 20% per annum.
For example, interest rates at BlockFi’s lending service vary by the borrower’s risk profile and start at 4.5% per year.
Coinbase reserves the right to revise terms in response to changing market conditions.
Customers will not need to spend time filling out forms or undergoing credit checks. They should receive funds within two to three days. According to Coinbase representatives, for many this will be a good way to address an acute liquidity need without having to sell Bitcoin.
Initially, clients in Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin and Wyoming will be eligible. To do so, you must apply and join the waitlist.
In conversation with The Block, a Coinbase spokesperson said there are plans to broaden assets in the lending service, as well as to obtain licences in other states.
As reported in July, Coinbase announced that deposits of users in the DAI stablecoin would accrue 2% per annum. Since last year, users of the exchange have earned 1.25% per annum on deposits in the USDC stablecoin.
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