Editor’s take: Coinbase is taking a bit of a risk with its lending feature. Bitcoin is incredibly volatile and there’s no guarantee that the collateral put up today will be worth enough to cover the value of the loan a year from now. Then again, lending in general is risky business for both the borrower and the lender, so perhaps it’s par for the course.
San Francisco-based cryptocurrency exchange Coinbase this week said it’ll soon allow US customers in select states to borrow cash and use their Bitcoin holdings as collateral.
Coinbase’s new feature, which launches this fall, will let users borrow up to 30 percent of their Bitcoin holdings, or up to $20,000 in cash, at an eight percent APR. Borrowers will have up to one year to repay the principal.
Because you’re backing the loan with funds you already have, there is no long application or credit check to worry with. Coinbase said interested parties can get cash in their accounts in 2-3 days with just a few taps.
The exchange is pitching the loan option as an alternative for users that need cash quick but don’t want to prematurely sell their crypto or take out high-interest loans.
Per Coinbase’s fine print, the lending feature will initially be available to customers in fewer than 20 states including Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin and Wyoming.
Coinbase didn’t say when or if it plans to expand the offering to other states, nor do we know exactly when the lending will begin. In the interim, interested parties can join a waitlist to be notified when the feature goes live.