In a strategic move to dominate the digital finance landscape, COIN recently took onboard a fresh crypto lending venture designed exclusively for institutional clients in the US. This service fills an evident gap rendered by the setbacks of companies like Genesis and BlockFi. COIN has sought exemptions under its subsidiary, Coinbase Credit, Inc., as manifested in the September 1 filing with the US Securities and Exchange Commission (SEC). The filing also reveals Alesia Haas, COIN’s CFO, being highlighted as a related party.
Contributions of $57 million have already been made towards this program by clients using the Prime Service of Coinbase. Prime, an all-service broker platform, enables institutional users to perform trades and store their assets securely.
The focal point of this proposed service allows institutions to lend digital assets to Coinbase under standardized terms, qualifying for a Regulation D exemption. This regulation allows firms to trade securities without prior registration with the SEC.
This crypto lending scheme works on a system where clients lend mostly cryptocurrency assets to Coinbase, receiving collateral exceeding the loan value in return. COIN presents secured loans to its institutional trading clients, similar to the prime brokerage services from traditional banks.
In their vision to rebuild a centennial financial system, Coinbase use crypto to provide more economic freedom and trust. The company’s objectives expand beyond their own products and services, aiming to support other builders bring 1 billion people into the world of crypto.
Genesis and BlockFi, who previously offered similar lending services, were hit hard with significant losses causing court-filed bankruptcy. Coinbase, however, has stayed in the race. Earlier, the company proposed a Borrow Service and an interest-bearing Lend Program. While the former allowed retail users to secure cash loans depositing Bitcoin as collateral, the latter, offering interest to users lending USDC to the platform, was cancelled due to legal threats from SEC.
COIN’s latest lending scheme is specially designed to cater to sophisticated institutional investors. Consequently, it is embedded in a regulatory framework that is typically less restrictive, factoring in that large investors carry the expertise to manage such intricacies effectively.
Source: Cryptonews
