In a Tweet posted yesterday, Cryptocurrency giant Coinbase announced that its U.S. customers (in select states) will soon be able to borrow a percentage of their bitcoin holdings in cash.
On the Coinbase blog, product manager Thorsten Jaeckel elaborated,
with today’s announcement, we want to give our customers even more control over their crypto investments while offering secure access to cash at the same time.
US customers in eligible states* are now invited to join the waitlist for the option to borrow up to 30% of their Bitcoin holdings.
As one of the most highly regulated crypto exchanges to launch a lending product, Coinbase is setting cautious limitations on would-be borrowers. The new program caps credit lines at $20,000 per customer and offers an 8% interest rate for bitcoin-backed loans that are one year or less.
Intended to be easy to use, the program does not require borrowers to fill out a lengthy application or go through a credit check. Customers can “simply sign up with a few taps and get the cash in their accounts within 2–3 days.”
Coinbase is not the only company to test the idea. According to Tech Crunch, Square’s crypto-friendly Cash App also recently announced that it is trialing a lending product that will give customers short-term microloans.
Initially, the new Coinbase product will only be available in seventeen states as the company works to get licenses for the rest. The eligible states include Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin, and Wyoming.