US crypto trading platform Coinbase has announced it plans to start offering in fall loans in which Bitcoin will be used as collateral, The Block has reported.
The move will allow Coinbase to enter the lending space and become a direct competitor to companies like BlockFi.
The service is reportedly to be launched initially in some US states, where the exchange users will be able to borrow cash. It should be noted that Bitcoin will act as collateral in these transactions.
The service will be launched initially in the states of Alaska, Arkansas, Connecticut, Florida, Georgia, Illinois, Massachusetts, New Hampshire, New Jersey, North Carolina, Oregon, Texas, Virginia, Nebraska, Utah, Wisconsin and Wyoming.
While the service will only be originally available in these states and the only collateral used in the transactions will be Bitcoin, the platform plans to add more states and collaterals in the future.
Loans will be up to 30% of the clients' crypto funds or a maximum of $20,000. Regarding interest rates, the exchange will charge a fixed annual fee of 8%, for the maximum repayment period of one year.
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