The largest U.S. cryptocurrency exchange Coinbase, as it turned out, took the first loan secured by bitcoins from Goldman Sachs bank.
As of 2021, Goldman Sachs managed $2.5 trillion in assets.
Coinbase’s work with Goldman is the first step toward recognizing cryptocurrency as collateral, which deepens the bridge between the fiat and cryptocurrency economies, said Coinbase Institutional head Brett Tapol.
The dollar value of the loan was not disclosed, but it was secured by a portion of Coinbase’s total assets of 4,487 bitcoins, which is about $170 million to date. The loan includes 24-hour risk management and assumes that Coinbase will replenish the collateral in BTC if prices fall too low.
Loans backed by bitcoins and other cryptocurrencies are commonplace in the crypto industry, especially in decentralized finance (DeFi) protocols, but it is rare in traditional finance, where cryptocurrency is considered risky and unsuitable as collateral.
News of the bitcoin-backed loan has been hotly debated on Twitter. Bitcoin podcast host Preston Pysch saw this as a correlation to the actions of regulators: “No wonder the SEC is hiring people.”