Coinbase has reintroduced its Bitcoin-backed loans in the United States, allowing users to borrow against their digital asset holdings. The product, developed through a collaboration with decentralized finance protocol Morpho Labs, enables account holders, excluding those from New York, to borrow up to $100,000 in USD Coin (USDC) using their Bitcoin as collateral. This service operates on Base, Coinbase’s Ethereum layer-2 network.
Max Branzburg, Coinbase’s vice president, highlighted that the initiative underscores the exchange’s dedication to economic freedom. He emphasized that these crypto-backed loans enable customers to leverage their Bitcoin holdings more effectively while maintaining on-chain transactions. Importantly, the loans are accessible without incurring Coinbase fees or requiring credit checks, offering users flexible repayment terms.
This launch marks Coinbase’s second venture into Bitcoin lending. Earlier, the exchange ceased its Borrow program, which offered BTC-backed cash loans, terminating it officially on November 20, 2023.
The demand for Bitcoin-backed loans is increasing, providing a means for holders to secure capital without liquidating their assets, thus avoiding potential tax repercussions. This practice, akin to familiar wealth management strategies, is anticipated to expand with the growing value of Bitcoin and the entry of more financial institutions into the crypto lending arena. According to HFT Market Intelligence, the market for such loans might escalate from $8.5 billion in 2024 to $45 billion by 2030.
As institutional interest in crypto lending grows, companies like Ledn are paving the way for smoother adaptation in the financial sector, moving beyond exchange-traded funds to engage directly in the crypto lending business.