Coinbase has introduced a new service allowing customers of the United States (except those in New York) to borrow USDC stablecoins using their Bitcoin as collateral.
The new feature will allow users to get quick loans without selling their Bitcoins. Loans will have flexible repayment options and competitive interest rates. The service uses Morpho, an open-source lending protocol on Coinbase’s Base blockchain.
The company said in the blog, “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.”
Users can borrow up to $100,000 in USDC according to their Bitcoin holdings. When users borrow, their Bitcoin is converted into Coinbase Wrapped Bitcoin (cbBTC) at a 1:1 ratio and held as collateral on Morpho.
The interest rates are dynamic and adjust with market conditions in real-time. The loan terms provide consumers with repayment freedom, as there is no predetermined repayment timetable, and users may track their loan status via the Coinbase app. If the loan amount plus interest exceeds the value of the collateral, loans are subject to liquidation.
Coinbase highlights the advantages of borrowing Bitcoin rather than selling it, citing potential tax benefits in deferring capital gains or losses.
The launch of these Bitcoin-backed loans is another step in Coinbase’s commitment to provide users with “greater control over their financial lives,” according to the company.
By combining Coinbase’s accessibility with the transparent, decentralized features of on-chain protocols, the company hopes to provide “vastly improved financial services.”
Also Read: Coinbase Win Legal fight Against SEC Over Crypto Regulations
