World’s second largest cryptocurrency exchange, Coinbase, has introduced a new feature that would enable users take credit loans.
Using their Bitcoin as collateral, eligible customers can now take a maximum loan of 40% of the value of their Bitcoin value without prior credit checks, with the highest limit of $1 million.
In an official statement, Coinbase said the feature will only be available for customers in 20 states in the United States but indicated plans to roll out the feature to the entire US market soon.
Also read, How to use Coinbase in Nigeria
This new feature requires customers to pay a monthly interest fee which is calculated at an 8% annual rate of the loaned amount. Customers are to pay a minimum amount of $10 as monthly payment.
Customers’ collateralized Bitcoins will be stored safely on Coinbase. Therefore, customers have the liberty to pay their outstanding balance whenever they’re ready.
The loaned amount will also have instant deposit features to the linked bank account of customers or PayPal, without additional fees.
Coinbase will also offer fixed-term loans to its customers in Connecticut state of the US, offering eligible customers cash loans equivalent to 30% of their Bitcoin value on a one-year basis. Customers will have access to a maximum amount of $100,000 in fixed-term loans.
Also read, How to buy Bitcoin from Coinbase in Nigeria
Coinbase also revealed in a statement that it won’t be reporting customer’s loan information or any related activity to private audit or credit agencies for now. A clause that might change in the future due to regulations in some states in the US.
The move by Coinbase to enable customers use Bitcoin as collateral will most likely increase Bitcoin adoption in the US.
It also means BTC holders do not need to go to banks before accessing loans neither do they have to pay high interest rates nor use tangible assets as collateral.
This could become a sustainable credit solution for Bitcoin investors that are in the US.
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