Coinbase crypto loans are set to expand the crypto exchange’s offerings. As the lending industry gets hotter, every crypto player wants its share from the pie. Well known crypto exchange, Coinbase, will soon launch crypto-backed loans starting with BTC-backed loans.
Coinbase customers will get loans in fiat currency against their Bitcoin holdings to the tune of 30 percent of their BTC assets. These loans will be backed by a digital asset, but the loan amount itself may be in fiat or other denomination. Currently, the crypto exchange has vast lending operations, and these latest Coinbase crypto loans would further expand its lending portfolio.
Coinbase crypto loans serve a wide range of consumers
Cryptocurrencies undergo severe volatility cycles, making them a tricky lending asset. So, the very idea of crypto lending does include a volatility component. For example, the amount owed by an individual will not change despite a massive change in the underlying or collateral cryptocurrency. On the contrary, the same cryptocurrency can appreciate multiple times overnight, and the debt can be paid much sooner than the due date.
Currently, the maximum loan lend by Coinbase is $20,000 with an interest rate under eight percent. The time to pay back the loan is the maximum one year. Customers wishing to avail the Coinbase crypto loans have to go through an application approval process from the Coinbase authorities.
Crypto loans will help bring BTC to the mainstream lending industry
Max Branzburg of Coinbase states that the upcoming Bitcoin-backed loans will help persons with varying financial needs. Whether it is buying a car or credit card debt, Coinbase crypto loans a myriad range of customers. Initially, customers in only 17 states will be able to access BTC-backed loans.
The crypto exchange will hold all the cryptocurrencies involved in these loans instead of a third-party custodian. Industry analysts think that Bitcoin-backed loans are a great way to mainstream the crypto investments and crypto lending operations.