Coinbase has relaunched Bitcoin-backed loans in the United States , allowing users to borrow against their Bitcoin holdings. The service, unavailable to residents of New York, lets U.S. account holders access up to $100,000 in USD Coin (USDC), using Bitcoin stored on Coinbase as collateral. The exchange partnered with decentralized finance protocol Morpho Labs to manage the lending process on Base, Coinbase's Ethereum layer-2 network. Max Branzburg, Coinbase's vice president, emphasized the company’s commitment to “economic freedom,” stating the service empowers customers to do more with their Bitcoin holdings on-chain. A Coinbase representative clarified that the company offers users access to the loan market but does not directly issue the loans. Customers can benefit from competitive interest rates, flexible repayment terms, and no Coinbase fees or credit checks. This marks Coinbase’s second venture into Bitcoin lending. The company previously ran a Borrow program, which allowed cash loans backed by BTC holdings, but it was discontinued in November 2023. Bitcoin-backed loans offer an advantage to holders by providing liquidity without requiring them to sell their Bitcoin, helping them avoid hefty tax bills. Wealthy investors have long used asset-leveraged loans as a way to maintain their financial standing, a strategy sometimes referred to as “borrow, borrow, die.” As Bitcoin's value rises, the demand for these loans has surged, creating significant market growth potential. The market for Bitcoin-backed loans is expected to expand from $8.5 billion in 2024 to $45 billion by 2030, according to HFT Market Intelligence. This growing demand is attracting traditional financial institutions to the crypto lending space. Bitcoin-backed lending platform Ledn noted that major players are moving beyond exchange-traded funds to explore crypto lending opportunities. With Bitcoin adoption increasing, Coinbase’s return to this market underscores the broader trend of integrating digital assets into mainstream financial products. The company’s collaboration with Morpho Labs signals a step toward innovative, decentralized financial solutions that cater to a growing segment of crypto-savvy investors. This move aligns with the rising need for flexible, blockchain-driven financial options.
