- Coinbase Global appears eager to capitalize on this market gap; the exchange has launched its cryptocurrency lending service for U.S.-based institutional investors.
- This development coincides with Coinbase announcing a $180 million bond repurchase program on the same day. Initially, Coinbase had initiated a bond repurchase initiative with a cap of $150 million.
- Coinbase had previously ventured into lending. In May, the company discontinued a service called Coinbase Borrow, which allowed individuals to borrow against their Bitcoin holdings, primarily targeting retail investors.
Coinbase, the largest exchange in the US, started to offer a new service for institutional investors in the US after increasing its bond purchase limit.
Coinbase Aims to Fill the Gap in the U.S.
Last year, the cryptocurrency lending market took a significant hit with the collapse of major players like Genesis Global, BlockFi, and others. Coinbase Global seems willing to capitalize on this gap in the market as the exchange has launched its cryptocurrency lending service for U.S.-based institutional investors.
According to a recent filing with the U.S. Securities and Exchange Commission (SEC), customers of Coinbase Prime have already invested over $57 million in the lending program. Coinbase Prime is a full-service prime brokerage platform that allows institutions to trade and custody assets. In a statement released on Tuesday, the crypto exchange mentioned:
“With this service, institutions will be able to lend their digital assets under standardized terms eligible for a Regulatory D exemption for Coinbase.”
This development coincides with Coinbase announcing a $180 million bond repurchase program on the same day. Initially, Coinbase had initiated a bond repurchase initiative with a cap of $150 million. After receiving an initially unfavorable response, the company decided to significantly expand the total amount allocated for repurchasing 2031 bonds to $180 million.
Coinbase and Cryptocurrency Lending
Coinbase had previously ventured into the lending space. In May, the company discontinued a service called Coinbase Borrow, which allowed individuals to borrow against their Bitcoin holdings, primarily targeting retail investors. The current institutional program operates under the same entity known as Coinbase Credit.
Additionally, in June, the SEC made allegations against Coinbase related to unregistered securities offerings and sales connected to its staking service program. This program allowed users to stake their coins with Coinbase to earn interest in order to secure blockchain networks. A coalition of U.S. states called for Coinbase to cease its staking services.
Notably, many prominent cryptocurrency lending platforms, including Celsius Network, BlockFi, and Genesis Global, faced financial difficulties last year. These lenders engaged in high-risk strategies that did not yield positive outcomes and resulted in a series of failures that significantly reduced borrowing options and leverage for investors.
