Coinbase launches Bitcoin-backed loans for US users

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cryptocurrency exchange Coin library (NASDAQ: COIN) has launched a new service that allows U.S. customers (except New York State) to borrow against their funds (Cryptocurrency: USDC) Bitcoin holdings.

This new product allows users to access liquidity without selling Bitcoin, offering instant loans with flexible repayment terms and competitive interest rates Morpho butterflyan open source lending protocol based on Coinbase’s Layer-2 blockchain.

Payable immediately in USDC, these loans offer flexible repayment options and competitive interest rates dynamically set by Morpho's open market loan pool.

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"It's now easier and faster than ever to get a Bitcoin-backed loan on Coinbase. In less than a minute, you can get a USDC loan without selling your Bitcoin," the company said.

This development aims to bridge the gap between holding crypto assets in the future and accessing funds to meet current needs.

When a user borrows USDC with Bitcoin, the collateral is automatically converted into Coinbase Wrapped Bitcoin (cbBTC) at a 1:1 ratio and transferred to the Morpho protocol.

Launched in September, cbBTC allows customers to move and spend their Bitcoin on-chain, and it remains within the Coinbase ecosystem while being used as collateral.

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Users can borrow up to $100,000 in USDC, depending on the amount of Bitcoin they pledge as collateral.

The interest rate is variable, adjusted in real time by Morpho based on market conditions, and changes dynamically with the creation of each block on the Base blockchain.

Loan terms provide users with repayment flexibility, with no fixed repayment schedule, while users can monitor the status of their loans through the Coinbase app.

If the loan amount (including accrued interest) reaches a predetermined level compared to the value of its collateral, users will face liquidation.

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Coinbase highlights the benefits of borrowing against Bitcoin rather than selling it, noting that there are potential tax advantages in deferring capital gains or losses.

The launch of these Bitcoin-backed loans marks another step in Coinbase’s efforts to give customers “more control over their financial lives,” Coinbase said.

By combining the accessibility of Coinbase with the transparent, decentralized nature of on-chain protocols, the company aims to provide "vastly improved financial services."

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This article Coinbase launches Bitcoin-backed loans for US users originally appeared on Benzinga.com