Coinbase has reintroduced Bitcoin-backed loans in the U.S., allowing users to borrow against their Bitcoin assets. This service is not available to New York residents and enables U.S. account holders to access up to $100,000 in USD Coin (USDC) using their Bitcoin as collateral.
The exchange has partnered with Morpho Labs, a decentralized finance protocol, to facilitate the lending process on Base, Coinbase’s Ethereum layer-2 network. Max Branzburg, Coinbase’s vice president, highlighted the company’s focus on “economic freedom,” stating that this service empowers users to maximize their Bitcoin holdings.
A Coinbase representative clarified that while the platform provides access to the loan market, it does not directly issue the loans. Users can enjoy competitive interest rates, flexible repayment options, and no fees or credit checks from Coinbase.
This is Coinbase’s second attempt at Bitcoin lending, following the discontinuation of its previous Borrow program in November 2023, which offered cash loans backed by Bitcoin.
Bitcoin-backed loans allow holders to access liquidity without selling their Bitcoin, helping them avoid significant tax implications. Wealthy investors have historically used asset-leveraged loans to maintain their financial status, a strategy known as “borrow, borrow, die.” As Bitcoin’s value increases, the demand for these loans has risen, indicating strong market growth potential.
The Bitcoin-backed loan market is projected to grow from $8.5 billion in 2024 to $45 billion by 2030, according to HFT Market Intelligence. This surge in demand is attracting traditional financial institutions to the crypto lending sector. Coinbase’s return to this market reflects the broader trend of integrating digital assets into mainstream finance, signaling a shift towards innovative, decentralized financial solutions for crypto investors.
