Coinbase is launching a new credit platform in the United States, aiming to fill the void left by collapsing credit firms during the cryptocurrency industry’s crisis.
The new credit service allows institutions to lend their digital assets under standardized terms, and according to Coinbase, it is structured to enable capital raising without requiring SEC registration, leveraging the Regulation D exemption.
Coinbase Discontinues Previous Credit Service
Due to low user interest, Coinbase decided to gradually discontinue its previous credit service, Coinbase Borrow. The Borrow service allowed individual users to secure fiat loans of up to $1 million by using up to 40% of their Bitcoin assets, offering an annual interest rate of 8.7%. In July, the exchange announced that existing credit holders needed to clear all outstanding balances by November 20.
Prime Service Users Invest
Users of Coinbase’s Prime service have already invested $57 million in the new credit program, as stated in a regulatory notice dated September 1, signed by CFO Alesia Haas.
Crypto Exchanges and Credit Services
Crypto exchanges are integrating credit services into their operations for strategic purposes. These services not only increase revenue beyond transaction fees but also enhance customer satisfaction by offering a broader range of financial solutions on a single platform, thereby increasing customer loyalty.
This move comes after a period when, about three months ago, the SEC accused Coinbase of acting as an unregistered exchange instead of a registered one and failing to trade crypto asset gains in a registered manner.