Coinbase, a leading cryptocurrency exchange, has rolled out a lending service specifically for big institutional investors in the U.S. The move aims to fill the gap left by the bankruptcy of key players in this niche, as reported by Bloomberg. Regulatory filings reveal that $57 million has already been poured into this lending initiative via Coinbase Prime, a platform that caters to institutional clients for trading and asset custody.
In a recent statement, Coinbase mentioned that the new service allows institutions to lend their crypto assets to the exchange on standardized terms, under a product that falls under a Regulation D exemption. This enables Coinbase to further lend these funds to other institutional parties.
This launch comes on the heels of several high-profile failures in the lending sector last year, including Celsius Network, Blockfi, and Genesis Global. These collapses, primarily due to risky financial maneuvers, have shrunk borrowing and leverage options in the market.
While Coinbase had previously offered a retail lending service known as Coinbase Borrow, it ceased these operations in May. However, the same team that managed this service, known as Coinbase Credit, will be overseeing the new institutional lending program.
Coinbase has also faced regulatory scrutiny, much like other crypto firms including Binance, the world’s largest digital asset exchange. The U.S. Securities and Exchange Commission (SEC) has been tightening its grip on the crypto industry, and in June, charged Coinbase for unregistered securities offerings related to its staking-as-a-service program. This program had allowed users to lend their digital assets to the exchange in return for yields that help secure blockchain networks.