Coinbase (COIN) has introduced a new cryptocurrency lending service in the United States aimed at institutional customers, filling a gap left by the likes of Genesis and BlockFi.
This platform was quietly revealed in a filing with the U.S. Securities and Exchange Commission on September 1, showing that $57 million had been raised.
According to a source, customers can lend money to Coinbase, primarily in the form of cryptocurrency assets, and receive collateral assets worth more than the value of the loan. Over-collateralization acts as a safeguard against defaults.
Coinbase can then turn around and facilitate secured loans for institutional trading clients, similar to the prime brokerage services offered in traditional finance by banks.
Genesis and BlockFi had provided similar lending services in the U.S. but suffered significant losses last year, leading to financial troubles.
This new service differs from Coinbase’s controversial Lend program, which was canceled in 2021. That program targeted retail customers and faced opposition from SEC officials. Instead, this new lending service is aimed at institutions, meaning fewer regulatory hurdles, assuming that large investors have the capacity to handle it.