Coinbase once again launched Bitcoin loans for its customers in the United States, excluding those in New York. The company added that the loans would eventually be available to users in other jurisdictions. The launch will be the second in the exchange’s history after the feature was shut down in 2023.
BlockFi, Genesis, and Celcius are among the crypto lending firms that fell bankrupt during the crypto winter in 2022. The phenomenon swayed investors’ and users’ interest away from the idea.
Coinbase, however, added that its new crypto-backed loans were different from the previous offerings. The company said that it would act as a middleman in the transaction. Coinbase revealed that the operation would be powered by Morpho, a DeFi lending protocol with deposits of over $3.7 billion.
Paul Frambot, Co-founder of Morpho, commented that his app’s customizability makes it easier for Coinbase to remain in control of their crypto-backed loans. “It also eliminates the need to relinquish control or governance to third parties, such as DAOs.” said the CEO.
In the first attempt, Coinbase allowed users to borrow crypto loans amounting to $1 billion against 30% of their Bitcoin holdings.
However, the platform closed its feature after the US SEC filed a complaint that Coinbase was operating as an unregistered broker within the United States. Coinbase promised to learn from its mistakes before the second attempt.
Market analysts speculated that Trump’s upcoming inauguration could have fueled the return of “Coinbase borrow.” They added that the president-elect is expected to adopt numerous policy changes that could positively affect the market.