The new Coinbase loan service allows consumers to borrow cash against bitcoin holdings

Coinbase Inc. cryptocurrency exchange is entering the lending market with an option for some US customers to borrow money against their bitcoin holdings.

The loans will allow customers to borrow as much as 30% in cash against their bitcoin holdings on the exchange, up to $ 20,000 per customer. Interest on the loans is charged at 8% with terms of one year or less. Eligible customers will not need to fill out a long application or get credit checks and can sign up with a few taps to get cash within two to three days.

Coinbase presents the service as an alternative to traditional high interest personal loans. “We hear from customers that they need cash for expenses like home renovations or car repairs, but they don’t want to sell their crypto prematurely or take out high interest loans that could come with 20% + APR, ”Thorsten Jaeckel, Coinbase Product Manager. he said in a blog post today. “With portfolio-backed loans on Coinbase, customers can quickly borrow cash from their Coinbase accounts.”

According to Coindesk, Coinbase will not reinvest the collateral elsewhere and will keep the bitcoin in the exchange, unlike some crypto lenders who use the collateral for investment opportunities.

The service is currently available to customers in Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin and Wyoming, provinces in which Coinbase is licensed to provide a lending service. The company is pursuing licenses in other states to expand the service in the future.

The announcement comes as speculation continues to rise that Coinbase is preparing for an initial public offering later this year or early next year. The first report came in July with further speculation in the past week.

The path Coinbase can take in going public remains open to speculation. Louis Lehot, founder of L2 Counsel, told Bloomberg Law Aug. 11 that given the company’s valuation, direct listing makes more sense than a traditional public offering.

Image: Coinbase

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