Binance Enters Crypto Lending Business
Major cryptocurrency exchange Binance just took another step in expanding their services as they're entering the crypto lending business.
Binance said it will launch their new Lending Platform August 29 6:00 AM (UTC).
"The annualized interest rates for upcoming phases will be adjusted based on market reception of this initial phase," the company said.
The designated hard cap per account for BNB- and USDT-denominated lending products will be initially set at 500 BNB and 1,000,000 USDT respectively.
"Binance users can decide the amount of tokens they want to lend at the time of subscription and will be able to retrieve funds with guaranteed interest after the designated subscription period," the exchange claims, adding that it will be evaluating new coins to support as lending products based on demand.
According to CEO of Binance, Changpeng Zhao, "lending on Binance goes to Margin borrowers, who pay the interests. Simple."
"This will also increase the availability of funds to lend to Margin traders, so expect the (previously low) margin limits to increase a bit. Again, Binance is just a matchmaker," he added.
Following the announcement, BNB price dropped and is (13:02 UTC) down by 1.3% in the past hour and by 0.5% in the past 24 hours.
As reported, the crypto lending market has been experiencing an increasing interest in the past 12 to 18 months. More and more HODLers are using their digital asset holding as collateral for fiat currency loans. While the reasons to take out loans are myriad, one of the biggest arguments for taking out a crypto-backed loan is that it can help investors reduce their crypto tax bill.
In the market, there are multiple crypto lenders such as BlockFi, Celsius Network, Nexo, EthLend, Genesis, Maker and others.
According to a recent report by crypto startup Graychain, crypto lending is already more than USD 4.7 billion sector. However, the estimated annual interest revenue is only USD 86 million.