Using Bitcoin As Collateral, Coinbase Users Can Borrow Up To $1 Million
One of the leading crypto exchange Coinbase introduced to its customers a new loan feature, allowing them to borrow as much as 40% of their bitcoin value up to $1 million with no credit checks. Coinbase announced the news on Twitter.
“Have you ever needed cash for something urgent, like medical bills or car repairs? In the past, you might have sold Bitcoin to cover it and incurred a taxable gain or loss. Now you don’t have to.”
The borrowing minimum and maximum amounts might vary by state, the company clarified.
The loans will be issued with an annual percentage rate of 8%, and borrowers won’t be required to show credit checks, Coinbase said.
Customers can receive the money to their PayPal or bank accounts, and need to make minimum $10 monthly interest payments. Coinbase is offering flexible repayment schedules.
Unlike traditional banks, Coinbase said that it won’t lend or otherwise use the collateralized bitcoin but instead continue to hold it.
Earlier this year, Coinbase didn’t go forward with plans to introduce a crypto lending product ‘lend’ after the U.S. Securities and Exchange Commission threatened the exchange with a lawsuit.
The lending product was supposed to power a crypto savings account that would earn customers a 4% annual percentage yield (APY), a return that’s multiples higher than most savings accounts at traditional banks.
