Coinbase Mulls Ethereum Collateral Amid Lending Program Expansion

Coinbase Ethereum Lending Staking

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Jaroslaw Adamowski

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Jaroslaw Adamowski

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June 26, 2023 06:54 EDT

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US-based crypto exchange giant Coinbase might add ethereum (ETH) as collateral in the near future as part of the company’s strategy to expand their lending business, according to Alesia Haas, Chief Financial Officer at Coinbase.

Haas was speaking during the exchange’s recent analyst Q&A call for the first quarter of 2021 after she was asked about Coinbase’s move to increase the available line of credit to USD 100,000 on bitcoin (BTC) balances.

In a May 13 shareholder letter, Coinbase said it has been “seeing rapid growth in originations” since it expanded its BTC-collateralized loan product with increased loan limits.

“We assess every coin that we are lending against for liquidity. Is there enough depth to liquidity on our exchange that we might be able to liquidate the collateral if we found ourselves under collateralized,” the CFO said, adding that “ethereum is very, very close, quite candidly.”

Per the CFO, the company “could look” to expand collateral to ethereum in the coming months and quarters.

She remarked that Coinbase launched its lending program in the fourth quarter of 2020 when a waitlist was opened, and the initiative started to expand in the first quarter of this year.

“We’re in the earliest days of our portfolio line of credit and the borrow/lend suite of products that we hope to roll out. So we approach all of our product offerings in sort of a crawl, walk, run style, where we start small sandbox and continue to expand and to invest,” Haas said.

In the long-term, Coinbase aims to expand the program to multiple assets underlying its loans, adding more foreign markets and increasing the balances that it will lend out, according to the executive.

Asked about the number of cryptoasset on which Coinbase allows users to stake with, Haas admitted this was “not available on very many assets.”

“We offer it on four different assets today, but we see a trend as more and more of the new cryptocurrencies that are being introduced are being introduced on proof of stake per call. So, as those are introduced, we will offer staking on an increasing number of assets as we go forward,” she said.

Commenting on staking, the company said in the shareholder letter it now had “over one million customers earning yield by staking their assets with Coinbase across six different assets.”

“In Q1, we announced our plan to offer 6% APR for staked ETH2, an upgraded version of Ethereum, the second-highest market capitalization crypto asset,” the letter said.
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Learn more:
– Coinbase Says It Is Targeting More Users, Not Lower Fees
– ETH Can Flip Bitcoin, But It Can’t ‘Have Its Cake & Eat It Too’ – Arthur Hayes

– Sequoia-Backed Onchain Custodian To Set Up New Crypto Lending Business
– Bitcoin Is ‘Perfect’ For The USD 20T Global Collateral Market – Research