Coinbase Launches Crypto Loans for US Institutions

Coinbase has ventured into the world of crypto loans for institutional investors within the country. This strategic move comes despite the ongoing regulatory uncertainty and challenges faced by Coinbase on its home turf. As a reminder, the US Securities and Exchange Commission (SEC) took legal action against the exchange in June, accusing the exchange of violating several regulations and offering trading services involving unregistered securities.

According to recent reports from Bloomberg, Coinbase has launched this new initiative under the banner of “Coinbase Credit.” Notably, the program has already seen Prime customers extending loans totaling nearly $60 million.

The exchange has elaborated on the service, stating that with the service, institutions can choose to lend digital assets to Coinbase under standardized terms in a product that qualifies for a Regulation D exemption.

The entry into the crypto lending market is significant as it comes at a time when some of the prominent cryptocurrency lending platforms, such as Celsius Network, BlockFi, and Genesis, have faced financial challenges, including bankruptcy, during the extended bear market.

Coinbase’s Strategic Response to Regulatory Challenges

The decision to focus on the American market is a strategic one, given the regulatory hurdles that Coinbase has encountered over the past few months in the world’s largest economy. The US SEC has played a pivotal role in creating these challenges for the exchange.

The regulatory scrutiny began in 2022 when the SEC initiated an investigation, alleging that certain digital currencies listed on the platform were operating as unregistered securities. This year, the Commission escalated its actions by issuing a Well Notice and filing a lawsuit against the exchange.

In response to these challenges, the exchange has been actively pursuing global expansion, with a particular focus on Europe, especially the United Kingdom. 

Additionally, the exchange introduced the Coinbase International Exchange, a platform based in Bermuda catering to non-US institutional users, as part of its broader strategy to navigate the evolving regulatory landscape while expanding its services worldwide.