The real meeting point between Fiat and crypto is here with us. Coinbase is making it possible for users to use Bitcoin as collateral to access fiat loans. However, this will only be restricted to the exchange and wallet users in the U.S.
Already, some customers are on Coinbase waitlist waiting for the launch of the feature. Unfortunately, the platform has not yet announced the launch date. Details of the service indicate that it will be rolled out in 17 states as a license for other states is being processed.
The “Bitcoin borrowing” option comes at a time when the global economy is still bleeding from the Coronavirus effects. However, the digital money market is awash will many crypto lenders and the Coinbase announcement could face stiff competition.
Coinbase Borrow Fiat with Bitcoin Details
The Coinbase borrow fiat with Bitcoin details have emerged but there are limitations on how much users can borrow. Customers can only borrow up to 30 percent of their crypto holdings. This might not make a lot of sense but a good starting point.
Borrowers are limited to borrow up to $20,000 with an annual fixed interest rate of 8%. According to the announcement, users have a maximum of one year borrowing period. The terms are however not cast on stone and are open to revision depending on the market performance.
Coinbase Borrow Fiat with Bitcoin is not Something New
It appears like crypto and Bitcoin lending is nothing new. However, the Coinbase borrow fiat with Bitcoin timing might be wrong for optimum uptake. For one, the global economy vibrancy has been slowed by the COVID-19 pandemic.
On the flip side, there is a growing partnership trend among crypto and fiat backed platforms and this could see the fiat and crypto lending take root among digital currency users. This could also become the latest real world crypto user case.