The well-known cryptocurrency exchange oinbase-lists-paypals-pyusd-stablecoin">oinbase">Coinbase has launched a brand-new crypto financing business that is intended for institutional investors in the US. Previously, in May 2023, oinbase">Coinbase’s retail lending platform, oinbase">Coinbase Borrow, had suspended new loan issuances.
The newly launched institutional lending service is accessible through oinbase">Coinbase’s Prime platform, which caters to institutional clients. According to a spokesperson from oinbase">Coinbase, the program enables institutions to lend their crypto assets to oinbase">Coinbase under standardized terms.
Notably, the lending service offered by oinbase">Coinbase qualifies for a Regulation D exemption, which permits certain offerings of securities to be made without registration. Since its launch on August 28th, the service has already attracted $57 million in investments from five investors, as reported in a filing with the U.S. Securities and Exchange Commission.
oinbase">Coinbase Credit, the same entity that manages the oinbase">Coinbase Borrow program, is responsible for operating the new institutional lending service. Despite halting its retail lending program, oinbase">Coinbase has chosen to leverage its existing infrastructure and expertise to provide the new service to institutional clients.
The timing of this launch follows the US SEC’s previous allegations against oinbase">Coinbase, accusing the exchange of offering and selling unregistered securities through its crypto-staking programs. While oinbase">Coinbase vehemently disagreed with these allegations, it temporarily paused its staking services in four states while the legal proceedings continued.
In 2022, the crypto lending industry experienced significant setbacks, with major companies like BlockFi, Celsius, and Genesis declaring bankruptcy amid the bear market for cryptocurrencies. Industry experts have emphasized the need for improved risk management and better asset-liability matching to address liquidity issues and prevent collapses.
It remains uncertain whether institutional investors will embrace crypto lending after the turbulence of the previous year. However, oinbase">Coinbase is taking a regulated approach with its new offering and hopes to attract institutions looking to generate yields on their crypto holdings.
