The crypto exchange giant Coinbase announced that it is planning to allow it’s United States customers to borrow fiats with bitcoin as collateral. The crypto exchange did not specify any set deadline for launching the service, but it is aiming to offer it by the end of this fall. The San Francisco-headquartered exchange has already started accepting customers and putting them on the wait list so that they can borrow when the full service is launched.
The borrowing service will be limited to residents in 17 states initially.
According to the announcement, the crypto exchange will only offer borrowing services to residents of 17 states initially. The residents of these 17 states can enjoy the borrowing services; Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin, and Wyoming. Coinbase is pursuing licenses in the other states and jurisdictions to offer the upcoming Bitcoin “borrow” services. The crypto exchange giant also revealed that the maximum borrowing period would be up to a year.
Customers can borrow up to 30 percent of the value of their deposited Bitcoin.
According to the official statement from Coinbase, US customers can borrow up to 30 percent of the value of their deposited Bitcoin holdings, and the loan-to-value ratio is much lower than offered by other popular platforms in the market. For example, BlockFi is offering up to 50 percent of LTV against Bitcoin collaterals. However, there will also be a cap of $20,000 for the total borrowing amount for US customers, along with a fixed annual interest rate of 8 percent. The crypto exchange revealed that the maximum borrowing period would be up to a year.
The US-based crypto exchange might revise the borrowing interest rate based on the various market conditions in the coming time.