Coinbase Launches Institutional Crypto Lending

By Mark Hunter

5 days agoThu Sep 07 2023 08:07:4


Reading Time: 2 minutes

  • Coinbase has launched a crypto lending service targeting US institutional investors, filling a void left by the collapses of companies like BlockFi and Genesis
  • The lending service operates under Coinbase Prime, providing a platform for members to lend digital assets to Coinbase and earn interest
  • The platform qualifies for a Regulation D exemption, enabling the sale of securities without SEC registration

Coinbase has introduced a crypto lending service aimed at US institutional investors in an attempt to fill the vacuum left by the collapses of firms like BlockFi and Genesis. Bloomberg reported yesterday that the exchange, whose retail lending program was pulled before launch in 2021 after negative attention from the SEC, has already seen great interest in the program, which qualifies for regulation exemption. The lending program is run by Coinbase Credit, the same arm of the company that pulled another program, Coinbase Borrow, in May.

$57 Million Already Leant

According to Bloomberg, the new lending option is an additional service within Coinbase Prime, the all-in-one crypto service for institutions. Members can now lend digital assets to Coinbase under standardized terms, and many already have, with some $57 million already reportedly lent to the platform in return for regular interest payments.

Coinbase can offer crypto loans in this manner because it qualifies for a Regulation D exemption, which allows the company to sell securities without having to register the offering with the SEC.

Retail Lending Program Was Aborted in 2021

The development comes on the back of the closure of the Coinbase Borrow service in May, which allowed retail investors to borrow against their Bitcoin holdings, with the same outfit, Coinbase Credit, running the show.

It also comes two years after Coinbase pulled a retail-focused Coinbase Lend program right before launch after the SEC threatened to sue the exchange if it launched it. At the time, Coinbase claimed to have proactively engaged with the SEC for nearly six months over the product but received minimal feedback and then, right before launch, the SEC initiated an investigation. This led to the issuance of a Wells notice, which prompted Coinbase to postpone the launch of Coinbase Lend.

Thankfully with its institutional offering, it has managed to avoid SEC entanglements.

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