Coinbase has reintroduced Bitcoin-backed loans in the United States, allowing users to borrow against their BTC holdings, while Komainu Holdings secured $75 million in Bitcoin funding from Blockstream to accelerate global expansion and integrate advanced crypto technologies.
Coinbase Reintroduces Bitcoin-Backed Loans, Expands Crypto Lending Market in the US
Coinbase has reintroduced Bitcoin-backed loans in the United States, allowing users to borrow against their digital assets. This re-launch marks a renewed commitment by the exchange to expand its suite of on-chain financial services, with the potential to significantly impact the burgeoning crypto lending market.
The new Bitcoin-backed loan offering enables US-based Coinbase account holders, excluding residents of New York due to regulatory restrictions, to borrow up to $100,000 in USD Coin (USDC) using their Bitcoin holdings as collateral. Importantly, only Bitcoin stored on Coinbase’s platform is eligible as collateral for these loans.
To streamline the lending process, Coinbase has partnered with decentralized finance (DeFi) protocol Morpho Labs. The loans will be facilitated entirely on Base, Coinbase’s Ethereum layer-2 network, ensuring a seamless and secure on-chain experience.
In line with its user-centric approach, Coinbase has structured the product to feature competitive interest rates, no fees, no credit checks, and flexible repayment terms. A Coinbase communications representative clarified that while the exchange provides access to the loan market, it does not directly issue loans.
This product launch represents Coinbase’s second attempt to tap into the Bitcoin lending market. The company previously offered a similar service under its Borrow program, which allowed users to secure cash loans against their Bitcoin holdings. However, that program, announced in May 2023, was discontinued in November 2023.
Bitcoin-backed loans provide a critical financial tool for cryptocurrency holders who wish to access liquidity without selling their Bitcoin. For many, this is an attractive option as it allows them to avoid triggering taxable events or reducing their long-term Bitcoin holdings. The rising demand for these services is reflective of a growing awareness of how crypto assets can be leveraged for broader financial purposes.
Borrowing against assets is a time-honored strategy among wealthy households, often described as “borrow, borrow, die.” This approach allows individuals to access capital through asset-leveraged loans, potentially in perpetuity, while avoiding capital gains taxes on asset sales. With Bitcoin’s increasing adoption and price appreciation, early adopters and long-term holders now find themselves in a position to use similar strategies.
According to HFT Market Intelligence, the market for Bitcoin-backed loans is poised for exponential growth, with projections suggesting it could surge from $8.5 billion in 2024 to $45 billion by 2030. As adoption rises, more institutions and platforms are expected to enter the crypto lending space, creating a more competitive and diverse ecosystem.
The Role of Institutions in Crypto Lending
The reintroduction of Coinbase’s Bitcoin-backed loans is part of a broader trend of institutional engagement in crypto lending. Beyond Coinbase, platforms like Ledn and others are actively working to make the crypto lending process more accessible and efficient. According to Ledn, major financial institutions are increasingly looking beyond traditional exchange-traded funds (ETFs) to explore opportunities in crypto lending. This shift reflects a growing recognition of Bitcoin’s utility as collateral and its appeal to both retail and institutional players.
Coinbase’s decision to reintroduce Bitcoin-backed loans aligns with a broader push to integrate traditional financial strategies with the cryptocurrency ecosystem. By enabling users to leverage their Bitcoin holdings without selling them, Coinbase is not only catering to the needs of individual investors but also contributing to the maturation of the crypto financial services sector.
As competition in the crypto lending market heats up, innovation will likely play a crucial role in defining the success of platforms like Coinbase. With its partnership with Morpho Labs and its focus on on-chain processes, Coinbase is setting a high bar for transparency, efficiency, and user-centricity in the sector.
The reintroduction of Bitcoin-backed loans by Coinbase marks a pivotal moment for the cryptocurrency lending market. By offering a secure, flexible, and transparent way to borrow against Bitcoin holdings, Coinbase is empowering users to unlock the value of their digital assets without sacrificing their long-term positions. As demand for such services continues to grow, the crypto lending market is poised for a new era of innovation and expansion, with Coinbase playing a leading role in shaping its trajectory.
Komainu Secures $75 Million Bitcoin Investment from Blockstream to Drive Global Expansion
Meanwhile, Komainu Holdings, a regulated cryptocurrency custodian backed by Nomura’s Laser Digital, has announced a $75 million funding round structured entirely in Bitcoin (BTC). The investment, led by Blockstream Capital Partners, represents a strategic move to support Komainu’s global expansion efforts and integrate cutting-edge cryptocurrency technology into its services.
This funding, pending regulatory approval, marks a milestone as the first-ever Series B investment to be conducted in Bitcoin. The funds will be managed through a Bitcoin treasury, which will employ advanced risk management and hedging strategies to maximize efficiency.
Paul Frost-Smith, co-CEO of Komainu, highlighted the innovative nature of the funding. “This transaction is the first ever Series B to be funded in Bitcoin. Komainu will run a treasury function around its own Bitcoin positions, considering yield enhancement opportunities and hedging as necessary,” Frost-Smith stated. He added that the company expects Bitcoin-backed funding to become increasingly common among crypto-focused businesses.
The investment also solidifies a deeper partnership between Komainu and Blockstream. Blockstream’s CEO, Adam Back, along with other executives, will join Komainu’s board of directors, bringing strategic guidance and expertise to the collaboration. The partnership aims to enhance Komainu’s service offerings by incorporating Blockstream’s cutting-edge technologies, including its Liquid Network and Asset Management Platform (AMP).
The Liquid Network, a Bitcoin sidechain, will be a cornerstone of Komainu’s efforts to streamline settlement processes. Through Komainu Connect, the firm plans to reduce settlement times for off-exchange margining and transactions from hours to minutes. Additionally, Blockstream’s AMP technology will enable automated support for tokenized assets, a move that aligns with the increasing demand for efficient and scalable digital asset management solutions.
The $75 million investment will be allocated toward:
Technological Integration: Adopting Blockstream’s enterprise-grade solutions, such as the Liquid Network and hardware security module wallets, to enhance service offerings.
Global Expansion: Komainu plans to target key markets, starting with Singapore and Japan, followed by the United States and Switzerland. This global push aims to position the firm as a leading provider of compliant digital asset services for institutional clients.
Bitcoin Treasury Management: Establishing a dedicated Bitcoin treasury to manage the funding efficiently. This will include exploring yield enhancement opportunities and leveraging hedging strategies to mitigate risks.
The funding round and partnership with Blockstream come on the heels of Komainu’s recent acquisition of Propine Holdings, the parent company of Propine Technologies, in October 2024. The acquisition strengthened Komainu’s position in Asia. The company has also applied for a Major Payment Institution license from the Monetary Authority of Singapore, signaling its intent to deepen its foothold in one of Asia’s leading financial hubs.
The Future of Institutional Crypto Services
As part of its expansion strategy, Komainu aims to leverage Blockstream’s advanced technologies to offer a broader range of digital asset services. Frost-Smith emphasized the importance of innovation in the firm’s growth, noting that the partnership will help Komainu cut settlement times and enhance its ability to support institutional clients.
Blockstream’s involvement is expected to bring additional capabilities to Komainu’s offerings. Peter Paul Pardi and Nicolas Brand, key Blockstream executives, will provide strategic guidance as Komainu integrates these new technologies and expands its services.
The $75 million Bitcoin-backed funding round is part of a growing trend of institutional involvement in the cryptocurrency space. With the integration of technologies like the Liquid Network and AMP, Komainu is setting a new standard for efficiency and scalability in the digital asset custody sector.
This development also highlights the increasing mainstream adoption of Bitcoin as both a store of value and a medium of transaction in financial markets. By structuring the investment in Bitcoin, Komainu and Blockstream are showcasing the cryptocurrency’s versatility as well as demonstrating its potential as a cornerstone of the evolving financial ecosystem.
