Coinbase is now offering loans of up to $1 million to eligible customers, whose Bitcoin will serve as collateral.
Eligible Coinbase customers in certain US states will now be able to borrow as much as 40% of the value of Bitcoin in their accounts, up to $1 million. These customers will be able to “take out a line of credit” without any prior credit checks, the crypto exchange said. The cash will be immediately transferred to their PayPal account or via ACH to their bank account.
In addition to a fixed APY of 8%, Coinbase is offering a flexible repayment schedule. Customers need only pay the interest due on monthly payment, to pay off the balance later. Coinbase will also offer fixed-term loans, which are currently only available for Coinbase customers in Connecticut. These fixed-term loans will enable customers to borrow up to 30% of the value of their Bitcoin in cash (up to $100,000) on a one-year basis.
Coinbase added that it will not report any “loan-related information or activity to credit reporting agencies at this time.” The exchange also noted that the Bitcoin held as collateral would remain in its custody and not be lent out or used for other purposes.
Coinbase ‘Borrow?’
The new service offering from Coinbase comes just one month after it halted plans to offer its “Lend” product. Earlier this year, Coinbase had announced the anticipated product, in which customers could earn 4% APY on their deposits of USD Coin. However, in September the Securities and Exchange Commission caught wind of this plan, and the regulator threatened to sue Coinbase if it went ahead with the offering.
Following a public spat, Coinbase decided to forego offering the product. Based on the previous reaction by regulators, it is still unclear how they will react to the latest disruptive service offered by the ambitious crypto exchange.
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