Could crypto exchanges be the new banks or money lenders? When Coinbase tried to launch its high-interest crypto “Lend” product, the SEC hit them with a Wells Notice. Coinbase later dropped the plan without much fanfare. However, a recent development signaled that the exchange might be trying something new once more.
On 3 November, Coinbase announced that some customers would be able to borrow up to one million dollars from the exchange itself.
Big news for the #BTC set …
We’re excited to announce that eligible customers can now borrow up to $1 Million USD from Coinbase.
— Coinbase (@coinbase) November 2, 2021
Terms and conditions?
Using a bank account or PayPal, users can borrow up to 40% of the value of the BTC in their accounts, all the way up to $1,000,000 (depending on state rules). Though Coinbase admitted there were additional terms, users only needed to pay the required interest every month until they could repay the balance. There were reportedly no credit checks involved either.
Worth noting, however, that the service is only for Coinbase users in certain American states. The eligibility criteria reported,
“If you reside in AK, AR, AZ, CA, FL, ID, IL, NC, NE, NH, NJ, NY, OH, OR, TN, TX, UT, VA, WA, or WY, and have BTC in your portfolio, you may be eligible to take out a line of credit.”
It also added,
“Coinbase does not report any loan-related information or activity to credit reporting agencies at this time.”
Yet, one skeptic of the idea was Dogecoin creator Billy Markus, who made a sarcastic comment wondering what might go wrong.
what could go wrong
— Shibetoshi Nakamoto (@BillyM2k) November 2, 2021
Naturally, there’s one question on most investors’ minds: what will the SEC have to say?
Pay me in Bitcoin
When investment expert Anthony Pompliano asked which American politician would be the first to accept their salary in Bitcoin, Miami’s Mayor Francis Suarez stepped up to the plate and asked for guidance.
— Brian Armstrong (@brian_armstrong) November 3, 2021
One person who reached out was Coinbase CEO Brian Armstrong. He shared a link to a Coinbase article describing how employees could be compensated with crypto of their choice.
The page clarified,
“If you choose to be paid in crypto, Coinbase will automatically convert your paycheck from U.S. dollars to crypto with no transaction fees.”