Cryptocurrency exchange Coinbase is now allowing customers to borrow up to 40 percent of their bitcoin value using bitcoin as collateral, the company announced Tuesday.
Coinbase users can borrow as much as 40 percent of the value of the Bitcoin in their account, up to $1,000,000, and can use either their bank account or PayPal to access the cash with no fees.
Customers will need to make $10 minimum monthly interest payments, and Coinbase is offering flexible repayment schedules.
The loans will be issued with an annual percentage rate of 8 percent, and borrowers won’t be required to show credit checks, Coinbase said.
“The Bitcoin you use as collateral remains safely held by Coinbase. It’s not lent out or used for any other purpose,” Coinbase said.
However, the borrowing minimum and maximum amounts may vary by state, Coinbase added.
The announcement comes shortly after the U.S. Securities and Exchange Commission (SEC) threatened to sue Coinbase if the crypto exchange went ahead with its plans to launch a program allowing users to earn interest by lending crypto assets.
Coinbase announced plans to drop the the crypto lending product in June. The program would have provided users with a high-yield alternative to traditional savings accounts, earning them a 4 percent annual yield on their USD Coin, a stablecoin that can always be redeemed one-to-one for USD.
The national average for a traditional savings is typically around 0.07 percent, with high-yield savings accounts still falling well short of even 1 percent, Coinbase said.
“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world. As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program,” the crypto exchange announced in June.
“We have also discontinued the waitlist for this program as we turn our work to what comes next. We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest. We will not stop looking for ways to bring innovative, trusted programs and products to our customers.”
Despite pulling the plug on its crypto lending product, Coinbase is still expanding multiple other programs, including opening its highly-anticipated NFT marketplace for which over 2 million people are already on the waitlist.
The exchange is also expected to release its third-quarter earnings on Nov. 11. Its second-quarter earnings in August blew estimates out of the water, supported by the growing popularity of bitcoin and other cryptocurrencies trading.
Coinbase reported diluted earnings per share of $6.42 for the second quarter, beating estimates of $2.82, while its revenue was up 1,040 percent compared to the second quarter of 2020, coming out at $2.03 billion.