Coinbase, $COIN, is now offering Bitcoin-backed loans.

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Coinbase has recently introduced a new service that allows users to borrow up to $100,000 in USDC (USD Coin) using their Bitcoin holdings as collateral. This innovative offering is designed to provide liquidity without requiring users to sell their Bitcoin, thereby avoiding potential taxable events.

To qualify for these loans, borrowers must maintain a minimum collateral ratio of 133%, meaning they need to pledge more Bitcoin than the loan amount. If the loan balance reaches 86% of the collateral’s market value, liquidation kicks in to cover the loan and any associated penalties. This ensures that the loan remains secure even if the value of Bitcoin fluctuates.

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The service offers flexibility with no fixed repayment schedule and variable interest rates that are set dynamically by the market conditions. Users can monitor their loan status via the Coinbase app and choose to repay the loan entirely or partially at their convenience.

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This development highlights Coinbase’s commitment to expanding the utility of Bitcoin within a decentralized framework. By integrating crypto lending, Coinbase aims to create new financial opportunities for its users while bridging the gap between decentralized and traditional financial systems.

In summary, Coinbase’s Bitcoin-backed loans offer a practical solution for users needing liquidity without selling their Bitcoin, but it comes with the responsibility of maintaining adequate collateral to avoid liquidation.

Sources:

https://www.msn.com/en-us/money/other/coinbase-is-offering-loans-against-your-bitcoin-should-you-get-one/ar-AA1xkfX3

https://finance.yahoo.com/news/coinbase-launches-bitcoin-backed-loans-193014320.html

https://finance.yahoo.com/news/coinbase-launches-bitcoin-backed-loans-074833223.html


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