Coinbase Reintroduces Bitcoin-Backed Loans to U.S. Customers

Coinbase says it’s launching a bitcoin-backed loan program that will allow customers to borrow up to $100,000 worth of USDC stablecoins using bitcoin in their accounts as collateral.

The loans will be offered through Morpho, a decentralized lending protocol that runs on Base, the blockchain that Coinbase developed. The loans will be overcollateralized, meaning Coinbase users have to hold more bitcoin as collateral than what they borrow, and the funding for the loans will come from pools of capital contributed by Morpho’s users. Over time, Coinbase users will be able to borrow against more types of crypto and access services beyond lending, Max Branzburg, Coinbase’s vice president of product said.

In 2023, Coinbase started to shutter a previous earlier bitcoin-backed loan program, citing re-evaluation of customer needs. A rise in bitcoin prices since then could boost demand for such loans, since they allow users to make other bets or spend money without selling the bitcoin and incurring a big taxable gain. Currently, Coinbase’s institutional business also has a lending service, catering to exchange-traded fund issuers, hedge funds, crypto miners and others.