I don't think it is anything new in the crypto market. There are couple of Defi platform where you can borrow money against your crypto holdings. Coinbase is a late entrant in this loan market but given its existing customer base, they might become the king of this crypto loan market.
I don't think it's an attempt to bring bitcoin within the purview of traditional banking. It's just business and an attempt to increase the net asset of the company. Because when you open a crypto account with coinbase and deposit your crypto there, it becomes a liability for them. But when they give out loans against collateral, it creates asset for them on the books.
It absolutely makes sense for those who are in need of money but don't want to sell off their crypto holdings.
Topic: [Coinbase] Bitcoin Collateral = FIAT Loans (Read 153 times)
This is a very interesting news.
this reminds me the young kids in the Silicon Valley. Poor in cash, rich in shares, who gave shares as a collateral for fiat loans to the banks, repaying them later when their stocks soared.
Of course this exempted them to pay the taxes on the whole capital gain.
Even better , they even forfeited the credit, not paying anything in takes.
Give 10 bitcoin, take 600K usd.
Buy a nice car.
When Bitcoin moons to 300K, default on the loan.
Give 2 BTC to the lender, take back 8 BTC.
You pay no capital gain tax (which capital gain?)
Bank pays no capital gain, as they actually entered in the BTC position @300K USD.
This has been done many times from people like Bill Gates , Steve Jobs or other tech guru.
this reminds me the young kids in the Silicon Valley. Poor in cash, rich in shares, who gave shares as a collateral for fiat loans to the banks, repaying them later when their stocks soared.
Of course this exempted them to pay the taxes on the whole capital gain.
Even better , they even forfeited the credit, not paying anything in takes.
Give 10 bitcoin, take 600K usd.
Buy a nice car.
When Bitcoin moons to 300K, default on the loan.
Give 2 BTC to the lender, take back 8 BTC.
You pay no capital gain tax (which capital gain?)
Bank pays no capital gain, as they actually entered in the BTC position @300K USD.
This has been done many times from people like Bill Gates , Steve Jobs or other tech guru.
I think that Coinbase could face some problems with regulators in near future after they started offering fiat loans, but there is a saying not risk no gains.
People can borrow up to $1,000,000 but I think they are giving up the custody of their Bitcoin to get some inflationary fiat that is on the verge of hyperinflation.
I understand that some people want to earn more money holding Bitcoin, but giving some company custody over Bitcoin is not acceptable for me.
People can borrow up to $1,000,000 but I think they are giving up the custody of their Bitcoin to get some inflationary fiat that is on the verge of hyperinflation.
I understand that some people want to earn more money holding Bitcoin, but giving some company custody over Bitcoin is not acceptable for me.
Quote
The Bitcoin you use as collateral remains safely held by Coinbase.
https://www.coinbase.com/borrow
I don’t think I have any sort of issues with this in the sense that bitcoin and or cryptocurrencies are being turned in to “traditional products and or services”. My issue is more so with the shady ass company that is offering it. I do not trust Coinbase one damn bit and would never do business with them again.
I'm not surprised that Coinbase would offer a lending service like this, since now that they're a publicly-traded company they've got to keep coming up with new products/services to keep their revenue rolling in; I just question whether this is going to be taken advantage of by many people.
People who own crypto tend to not want fiat, that's the first thing that comes to mind, and second, if you own bitcoin (or whatever Coinbase is accepting as collateral) you probably are well-off enough such that you wouldn't need a loan. I know those wouldn't apply to absolutely everyone and that there would be some crypto holders who'd use Coinbase's lending service, but my gut is telling me that it's just not going to catch on.
Look at the Lending section on bitcointalk. It is (or was) so frequently the case that people in need of a bitcoin loan never have any altcoins they can put up as collateral. That section represents a very small slice of the bitcoin-using population, true, but somehow I think the same thing is going to hold true in Coinbase's case. We'll see. I don't think it's a horrible idea on their part.
People who own crypto tend to not want fiat, that's the first thing that comes to mind, and second, if you own bitcoin (or whatever Coinbase is accepting as collateral) you probably are well-off enough such that you wouldn't need a loan. I know those wouldn't apply to absolutely everyone and that there would be some crypto holders who'd use Coinbase's lending service, but my gut is telling me that it's just not going to catch on.
Look at the Lending section on bitcointalk. It is (or was) so frequently the case that people in need of a bitcoin loan never have any altcoins they can put up as collateral. That section represents a very small slice of the bitcoin-using population, true, but somehow I think the same thing is going to hold true in Coinbase's case. We'll see. I don't think it's a horrible idea on their part.
They offer 2% interest on at least one stable coin there so this was only a matter of time before it happened.
This is what I am at looking in OP. I must need the rate of interest at first hand. Still, 2% is monthly or yearly rate? As per my country banks' standard, 2% per month is way too high; I never opt for going with such a big rate. If it is yearly rate, it is definitely a gift for people like me.You can borrow as much as 40% of the value of the Bitcoin in your account, up to $1,000,000.
Does it means that they are explicitly saying that there are risks with bitcoin up to 70%? In my bank, I am able to get loans up to 80% of my assets; it can be gold or real estate properties, 40% seems like a special case of crypto assets. 
Personally I have mixed feelings, Bitcoin is being slowly morphed into traditional banking,
or traditional banking practices are being applied to personal Bitcoin holdings. Of course
nobody is being forced to do this, its a choice, how many of us would be willing to
apply for a FIAT loan while handing over BTC as collateral to Coinbase so they can
keep it safe?
Well, this is part of the reasons I keep emphasizing on having decentralized non-custodial cryptocurrency businesses on Bitcoin Network. I'm not doing this because I hate a particular company, or the other. I'm doing it for the good of Bitcoin and its users. We have to also be very aware of the fact that humans can be easily brainwashed in a way that they nolonger remember that at some point in time they used to have a decentralized cryptocurrency, or things used to be done right. I won't be surprised if that's what certain people are counting on to be able to take over Bitcoin.
It's important to keep telling people to fully control their bitcoins. It will benefit the Network if majority or most of the supply is in the hands of their owners instead of few people or companies. That will help keep Bitcoin decentralized.
Better to use secure companies that enable you control your Bitcoin while using their services. If you want to use Bitcoin as collateral, make sure the Bitcoin is locked and controlled by proper multisig or smartcontract, not controlled by the company/people alone or atall . With this, the Bitcoin can only be released automatically to you when the terms of the contract is fulfilled
In my own idea taking a loan being profitable or not, directly depends on the situation and the inflation rate during the period of rising of the inflation rate taking a loan can be profitable especially if you use the loan to invest in different assets including bitcoin to stay safe from inflation and even earn some profits during this time while other people are losing money, but the other option can be using bitcoin as collateral to get loans, this can be good if you make sure that you can repay the loan and don't put your asset in danger, however, I belave time after time by bitcoin adoption there will be more places where you can use bitcoin as collateral to get a loan.
I think that people have to get away from the assumption that we have to have a distinct crypto ecosystem.
Why can't it be that bitcoin is used in conjunction with the traditional fiat economy? These are still positive developments given that it allows people to not sell their coins as often.
Idealism is often appealing. We need to look at what is actually practical here.
Why can't it be that bitcoin is used in conjunction with the traditional fiat economy? These are still positive developments given that it allows people to not sell their coins as often.
Idealism is often appealing. We need to look at what is actually practical here.
Going through Google found this platform where the same service is being offered with less interest rate.
Celcius - Borrow at 1% APR with your crypto
I'm not against coinbase plan of taking bitcoin as collateral and providing fiat. It needs to give competing value against similar services available in the market.
This ease the process of banking. People who have bitcoin now find a way to borrow money. At present banks take gold as collateral and provide money on valuation. This requires a big process, here with coinbase everything is possible from the home.
Another complication I find, when it is considered as collateral it can't be used anymore for trading purpose. If there is an access for trading, then it ease the process of making the monthly interest earned out of it.
Right now this service is available for residents of few States of USA.
Celcius - Borrow at 1% APR with your crypto
I'm not against coinbase plan of taking bitcoin as collateral and providing fiat. It needs to give competing value against similar services available in the market.
This ease the process of banking. People who have bitcoin now find a way to borrow money. At present banks take gold as collateral and provide money on valuation. This requires a big process, here with coinbase everything is possible from the home.
Another complication I find, when it is considered as collateral it can't be used anymore for trading purpose. If there is an access for trading, then it ease the process of making the monthly interest earned out of it.
Right now this service is available for residents of few States of USA.
They offer 2% interest on at least one stable coin there so this was only a matter of time before it happened.
However, like a lot of things cexes do, I don't think it's as attractive as the dex alternative (however more secure it may or may not be - the point is you still have choice).
However, like a lot of things cexes do, I don't think it's as attractive as the dex alternative (however more secure it may or may not be - the point is you still have choice).
If nothing else, the offer may be good for those who are looking to cash out their bitcoin, but they don't want to cash out.
So it is a good alternative for them, to just loan fiat and leave their btc as collateral to the exchange.
Coinbase is one of the top exchanges, so they may have improved their security after the recent hack.
They are just giving options for those btc holders who don't want to spend their btc, but use something either for personal or business reasons.
They offer 2% interest on at least one stable coin there so this was only a matter of time before it happened.
However, like a lot of things cexes do, I don't think it's as attractive as the dex alternative (however more secure it may or may not be - the point is you still have choice).
2% is reasonable which most banks do offer here on my country and you are right about cexes is on having these kind of options which we could really choose on.They do have their ownHowever, like a lot of things cexes do, I don't think it's as attractive as the dex alternative (however more secure it may or may not be - the point is you still have choice).
pro's and con's but same as you said that it is much better to have an option rather than have nothing at all.
Ill check out later on on whats their terms and conditions about fiat loans.
They offer 2% interest on at least one stable coin there so this was only a matter of time before it happened.
However, like a lot of things cexes do, I don't think it's as attractive as the dex alternative (however more secure it may or may not be - the point is you still have choice).
However, like a lot of things cexes do, I don't think it's as attractive as the dex alternative (however more secure it may or may not be - the point is you still have choice).
Just saw this on Twitter > https://twitter.com/coinbase/status/1455664736687722500?t=ykz8DqRvigAO7v6itH7m0Q&s=09
and verified on their website > https://www.coinbase.com/borrow?utm_source=twitter&utm_id=1M&s=09
Michael Saylor has been talking about this conceptfor a while in the same message
as not ever selling your Bitcoin, I didnt think this was going to happen this fast.
Personally I have mixed feelings, Bitcoin is being slowly morphed into traditional banking,
or traditional banking practices are being applied to personal Bitcoin holdings. Of course
nobody is being forced to do this, its a choice, how many of us would be willing to
apply for a FIAT loan while handing over BTC as collateral to Coinbase so they can
keep it safe?
Quote
We’re excited to announce that eligible customers can now borrow up to $1 Million USD from Coinbase.
and verified on their website > https://www.coinbase.com/borrow?utm_source=twitter&utm_id=1M&s=09
Quote
Now you can borrow up to $1,000,0001 from Coinbase using your Bitcoin as collateral. Pay just 8% APR2 with no credit check.
Michael Saylor has been talking about this conceptfor a while in the same message
as not ever selling your Bitcoin, I didnt think this was going to happen this fast.
Personally I have mixed feelings, Bitcoin is being slowly morphed into traditional banking,
or traditional banking practices are being applied to personal Bitcoin holdings. Of course
nobody is being forced to do this, its a choice, how many of us would be willing to
apply for a FIAT loan while handing over BTC as collateral to Coinbase so they can
keep it safe?
Quote
Choose what to borrow
You can borrow as much as 40% of the value of the Bitcoin in your account, up to $1,000,000.
You can borrow as much as 40% of the value of the Bitcoin in your account, up to $1,000,000.
Quote
Get your cash
Using your bank account or PayPal, get access to your borrowed cash quickly with no fees.
Using your bank account or PayPal, get access to your borrowed cash quickly with no fees.
Quote
Make monthly payments
Each month you only need to pay the interest due ($10 min). Pay off the balance when you’re ready. Additional terms apply
Each month you only need to pay the interest due ($10 min). Pay off the balance when you’re ready. Additional terms apply
Quote
Your Bitcoin stays safe
The Bitcoin you use as collateral remains safely held by Coinbase. It’s not lent out or used for any other purpose.
The Bitcoin you use as collateral remains safely held by Coinbase. It’s not lent out or used for any other purpose.
Jump to: