Coinbase Launches Ethereum-backed Loans

Coinbase Introduces Ethereum-Backed Loans for U.S. Clients

Key Points:

  • Coinbase launches Ethereum-backed loans for U.S. clients.
  • Eligible clients can borrow up to $1 million in USDC.
  • The service excludes New York due to regulations.

Coinbase has launched a new service allowing U.S. clients, except those in New York, to borrow up to $1 million in USDC using Ethereum as collateral. This initiative is led by Coinbase, with CEO Brian Armstrong announcing the service on Twitter.

The introduction of Ethereum-backed loans by Coinbase highlights a significant integration of traditional and decentralized finance, enhancing liquidity options for users. Immediate reactions from the market included a slight dip in Ethereum’s price, reflecting mixed investor sentiment.

This new service allows U.S. clients to use Ethereum as collateral for loans up to $1 million, enhancing liquidity without selling assets. Coinbase has partnered with Morpho to run this feature, leveraging the Base Ethereum Layer 2 network.

The loan issuance utilizes USDC, maintaining the Ethereum collateral on-chain through smart contracts managed by Morpho. Coinbase’s strategic move aims to integrate centralized and decentralized finance, boosting potential demand for Ethereum as collateral.

The market impact involves the increased availability of USDC, potentially boosting its circulation. The Ethereum market observed minor fluctuations in response, with long-term effects hinging on user adoption and overall sentiment.

**Brian Armstrong, CEO, Coinbase**, – “Today we’re excited to unlock more liquidity for U.S. Ethereum holders. You can now borrow against your ETH without having to sell, directly on Coinbase.”

Coinbase’s onchain lending segment, including BTC-backed loans, has surpassed $1.25 billion in loans. With Bitcoin loan limits also increased, the layered rollout of diverse collateral types further underscores Coinbase’s innovation in combining CeFi and DeFi ecosystems.

In summary, Coinbase’s launch of Ethereum-backed loans for U.S. clients, excluding New York residents, is a strategic expansion combining traditional finance with DeFi’s flexibility, potentially transforming crypto lending markets. The initiative is expected to pave the way for broader CeFi-DeFi collaborations, depending on uptake and regulatory responses.

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