Coinbase has launched a new crypto lending service in the U.S. for institutional clients, filling the void left by the blow-ups of firms like Genesis and BlockFi. According to a person familiar with the matter, clients can lend Coinbase money – predominantly crypto assets – and get collateral exceeding the value of the loan. This overcollateralization acts as a safeguard from disaster. Coinbase can then turn around and make secured loans to institutional trading clients, similar to the prime brokerage service banks provide in traditional finance.
The new service is different from the Lend program that Coinbase canceled in 2021, which was pitched at retail customers and faced objections from the SEC. This latest lending service is instead geared toward institutions, which means regulation is less onerous.
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, a Coinbase spokesperson said in a statement. 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 1 billion people into crypto.