Coinbase Borrow : Bitcoin Backed Cash Loans

Coinbase Borrow helps retail customers in US to get cash loan for their collateral in Bitcoin. You can avail loans upto 30% of your bitcoin holdings. The lending feature in Coinbase Product is going to come this Fall.  HODL your Crypto with Coinbase, make profits on your loan and repay the loan to get back your BTC.
Coinbase plans to initially launch Borrow in following 17 states in reverse alphabetical order
Wyoming, Wisconsin, Virginia, Utah,  Texas, Oregon, North Carolina, New Jersey, New Hampshire, Nebraska, Massachusetts, Illinois, Georgia, Florida, Connecticut, Arkansas and Alaska.
Initial launch may be only in this states. But, they are actively working on expanding into more states by working with respective state governments and procuring necessary licenses.

Bitcoin Backed Loan Terms

Coinbase, with headquarters in San Francisco, California, is one of the largest and most regulated crypto exchanges to venture into the lending business. The centralized behemoth exchange is setting conservative parameters on the product, maxing credit lines at $20K per customer.

They offer a really low interest rate of 8% (lower than 22%APR on credit cards) for bitcoin backed cash loans with less than 12 months term. This is the next logical step for the heavyweight exchange as most newbie users store their Bitcoin on the exchange.

READ :  PoolTogether Crypto Review : No loss lottery, Pros, Cons

Low interest rate on Coinbase Borrow will allow it to work in states without additional licensing. Generally, there’s additional licensing process to go through if the APR is higher, to avoid abusive lending practices and cheating customers.

This is a great opportunity for Retail customers to fully take advantage of the Bitcoin cash loan. Thus, giving a chance for their Bitcoin to appreciate in value and using the loan to fund their life. Repay the loan later and make more profits. Remember, this strategy only works in bull market time.

Coinbase Borrow will be a head-on competition to centralized Lending Platforms like BlockFi, Celsius Network, and Nexo.

The best part is no hassle in filling out long applications or go through extensive credit check for customers. Remember, you leave your Bitcoin as the collateral security.

Also, the loan processing time is just 2 to 3 days. It is lightning quick and also completely online. You don’t have to do bank visits to sign documents or other random wasting time things. For successful entrepreneurs, time is money!

Coinbase Borrow

The “Coinbase Borrow” feature is on a waitlist. Invite only model currently. Also, we hear that is set to go fully live in the fall. Coinbase is just starting out with Bitcoin but has ideas to further explore other Crypto assets in the near future.

READ :  CryptoPunks NFT Review 2021 - CryptoPunks For Sale

Coinbase Borrow

Coinbase gives you a personal loan and you can use it for what ever purpose you want, no questions asked.

Max Branzburg, Product head at Coinbase adds

Customers are free to use bitcoin backed cash loans for any purpose depending on their needs. It can be small purchases or even for large purchases like home repair or car repairs or pay off even higher APR credit card loans or personal loans higher-interest personal loans or credit card debt

Coinbase is working hard to get licenses in other states and even countries to expand its Borrow service. The waitlist includes the below tagline

Do you need cash for anything urgent? Have Bitcoin as collateral? It’s much better option than putting it on your credit card which charges 3X interest rate. Also, you don’t incur taxable situation if you borrow instead of selling Bitcoin to get cash.

The giant exchange adds that it won’t rehypothecate or reinvest the collateral elsewhere. Coinbase will keep the collateral of bitcoin just at the exchange. As a result, this makes it totally different from other Crypto Lending companies in existence now.

READ :  How To Buy Low And Sell High Bitcoin?


Parting Thoughts

Adding the Coinbase Borrow product can be a way to keep customer funds at the exchange instead of moving them to a safer cold storage hardware wallet. Square Cash App is also testing lending product on the market. But, the ticket sizes are too low with really short term loans.

CryptoandFire believes there is ample space for many players in the Crypto lending industry. As more assets move into Cryptocurrencies, we need to give options to consumers to choose what works best for them.

There is enough space for BlockFi and Celsius Network to operate, even with more competition. Coinbase IPO is coming up and the company will naturally want to acquire new sets of users and new revenue sources to boost its balance sheet.

Having a behemoth exchange doing the lending operations makes it a no brainer for customers to invest. They are one of the highly regulated exchanges that is legitimate and will improve the lending industry standards further.

Leave a Comment