As per WatcherGuru, Coinbase, one of the most well-known cryptocurrency exchanges has announced the return of Bitcoin loan program for the U.S. users. The return is said to be in a partnership with decentralized finance (DeFi) protocol, Morpho. The main aim of this initiative is to provide the users security, efficiency, and transparent lending options.
How Does this Bitcoin Loan Work?
The relaunched program will allow the users to borrow cash by leveraging their Bitcoin holdings as collateral. With Morpho in play, the users can access competitive interest rates, improved efficiency, all because of the unique hybrid protocol that combines peer-to-peer and pool-based lending. This process makes sure that there is better liquidity and the costs are reduced compared to the traditional loans.
Why Was It Discontinued?
Since the regulatory framework is yet not very well-defined, it posed various challenges and market uncertainty for Coinbase and the exchange decided to discontinue the program. Also, due to the collapse of lending platforms like Lendy, and Fundingscore, Coinbase was being scrutinized. This led the exchange revaluating its offerings to ensure viability and compliance.
Why Bring it Back?
Coinbase is bringing back the Bitcoin loans because many customers want a safe and regulated way to borrow money using their Bitcoin as collateral. By offering this service, Coinbase aims to help users meet their financial needs without having to sell their Bitcoin.
Why Morpho? Was It the Same as Last Time?
Coinbase has partnered this time with Morpho, a DeFi company that makes lending more efficient and transparent. This partnership allows Coinbase to offer better interest rates and faster loan processing.
Earlier when the lending process was discontinued, the loans were being managed by a single central authority but with Morpho in the picture, the loans will now be managed by decentralized systems. This makes the whole process more secure and trustworthy for the user.
This time around wit the relaunch, the borrowing cost will be lower, the processing will be faster, and security will be enhanced. Coinbase has strengthened compliance measures to make sure that it meets and follows the regulatory guidelines.
Impact on the Broader Crypto Market
This move is going to help Coinbase strengthen its position as an innovator in the cryptocurrency space. The relaunch will help not only Coinbase but the community as well. The initiative will offer its users a reliable way to access liquidity without losing their assets. Also, by limiting its offerings to U.S. users allows the exchange to focus on regulatory compliance and gradually expand its offerings.
Also Read: Ripple’s XRP Surges $3 Mark as Trump Unveils Pro-Crypto Plans
