Coinbase said it’s trying to “update the financial system that was built more than 100 years ago” with its new lending service.
American crypto exchange Coinbase (NASDAQ: COIN) has created a new crypto lending service in the US, according to CoinDesk, citing an anonymous source and a US Securities and Exchanges (SEC) filing.
The service will cater to large investors and US institutional clients, the September 6 report outlines.
The platform was “quietly revealed” in an SEC filing dated to September 1. The filing shows that $57 million has already been raised for the program.
According to CoinDesk’s anonymous source, clients can lend Coinbase money, primarily in the form of cryptocurrency assets, and receive collateral that exceeds the loan’s value. This overcollateralization acts as a safety measure against potential losses, the report states.
Coinbase can then offer secured loans to institutional trading clients.
Coinbase: “We are leveraging crypto to provide people with more economic freedom”
In a statement, a Coinbase spokesperson 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.”
“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.”
The announcement comes in light a market void created by the bankruptcies of major US lenders like BlockFi and Genesis – the latter of which will shutter its US spot crypto trading service later this month.
Coinbase has faced intense regulatory scrutiny over the past year. On Friday, August 4, the exchange filed a motion asking the judge to strike out the SEC case alleging it of selling unregistered securities.
The motion outlines that crypto exchanges are not under the authority of the SEC on the fundamental basis.
Coinbase CEO Brian Armstrong has warned on several occasions that a lack of regulatory clarity will drive crypto providers offshore.
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