Coinbase has unveiled a new service allowing U.S. customers (excluding those in New York) to borrow USDC stablecoins by using their Bitcoin holdings as collateral. This feature offers users the opportunity to obtain loans without selling their Bitcoin assets.
The platform promises quick and flexible loan options with competitive interest rates. The service operates through Morpho, an open-source lending protocol built on Coinbase’s Base blockchain.
In a company blog post, Coinbase emphasized the simplicity of the process, stating, “Getting a Bitcoin-backed loan on Coinbase is now easier and faster than ever. In under a minute, you can get a loan in USDC without ever having to sell your bitcoin.” Customers can borrow up to $100,000 based on the value of their Bitcoin holdings. When borrowing, Bitcoin is converted into Coinbase Wrapped Bitcoin (cbBTC) on a 1:1 ratio, which is then used as collateral within the Morpho system.
The loan’s interest rates are dynamic, adjusting with market conditions in real-time, and users enjoy the freedom of flexible repayment terms, without a fixed schedule. Loan details, including status updates, can be easily tracked through the Coinbase app. However, if the loan’s value, including interest, exceeds the collateral’s worth, liquidation may occur.
Coinbase points out the potential tax benefits of borrowing against Bitcoin, particularly in terms of deferring capital gains taxes, which would otherwise apply if the Bitcoin were sold.
This move represents another step in Coinbase’s mission to offer users greater control over their financial decisions. By integrating on-chain protocols with its user-friendly platform, Coinbase aims to enhance the accessibility and transparency of financial services.
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