Coinbase Gets Into the World of Crypto Loaning

Live Bitcoin News
Live Bitcoin News August 17, 2020
Updated 2020/08/17 at 7:13 AM
4 Min Read

Coinbase – one of the most popular cryptocurrency exchanges in the United States, as well as the world – has announced it will soon begin offering bitcoin and crypto-backed loans for customers to utilize.

Coinbase Is Offering Bitcoin-Backed Loans

Customers can take out fiat loans against roughly 30 percent of the bitcoin they already have. While the loans themselves won’t necessarily be in bitcoin, they’ll certainly be backed by the digital asset. Coinbase is now one of the largest exchanges and financial hubs to get into the lending business.

The idea of bitcoin-backed loans has always been tricky considering just how volatile the cryptocurrency can be. If bitcoin goes down, the person in question who took the loan will still owe the original amount, even if the price crashes overnight. On the other hand, there’s always the chance that bitcoin incurs a meteoric rise and thus the person who took out the loan can potentially pay everything back much quicker, relieving themselves of the financial debt they now owe.

At the time of writing, Coinbase has set its maximum loan amounts to roughly $20,000. In addition, interest rates are set at eight percent or less, and loans are expected to be paid back within a year’s time. While customers will not need to endure the pains and aches of a credit check, they will need to fill out an initial application that Coinbase executives can either approve or deny at first glance.

Should the person be lucky enough to get the okay on their application, they’ll typically receive the money within two to three days.

Max Branzburg – head of product at Coinbase – explained in a statement:

Customers may use bitcoin-backed loans in different ways depending on their financial needs, including for large expenditures like home or car repairs, financial major occasions like a wedding, or helping to manage higher-interest personal loans or credit card debt.

At press time, the loans are only available to customers in roughly 17 states, including Wyoming, Wisconsin, New Hampshire, Oregon, Texas, North Carolina and Florida. Several people are presently on a waitlist, hoping to garner approval for loans. The product has been released with the following tagline:

Have you ever needed cash for something urgent, like a car or home repair? In the past, you might have sold bitcoin to cover it and incurred a taxable gain or loss. Now, you don’t have to.

Moving the Industry Forward

All cryptocurrencies used to back the loans in question will be kept at the exchange and will not be held in custody via third parties or other institutions. Joseph Kelly – CEO and co-founder of crypto lender Unchained Capital – said that bitcoin-backed loans are a solid move forward when it comes to legitimizing the industry, explaining:

It’s a good bull-market product when customers have excess capital.

The post Coinbase Gets Into the World of Crypto Loaning appeared first on Live Bitcoin News.

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