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Coinbase takes out first BTC-backed loan from Goldman Sachs

Quick take:

  • Coinbase, one of the largest US exchanges, has acquired the first BTC-backed loan from Goldman Sachs.
  • It collateralized 4,487 BTC to take the loan.

Coinbase took out the first loan from Goldman Sachs, collateralizing bitcoin. Goldman Sachs manages over $2.5 trillion in assets as of 2021. The report was published by Bloomberg, which mentioned that Coinbase’s decision to take out the loan is envisioned to strengthen the relationship between crypto and traditional finance.

Coinbase's first ever BTC backed loan

“Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral which deepens the bridge between the fiat and crypto economies,” said Brett Tejpaul, head of Coinbase Institution.

The loan's value in dollars is not still revealed, but the loan was collateralized by pledging its 4,487 BTC holdings. The loan provides risk management for 24 hours but will require Coinbase to up the collateral if the prices plummet hard.

Bitcoin and crypto-backed loans are common in the crypto ecosystem, but most traditional finance organizations view crypto collateral as too risky. 

In a Monday blog post, asset management firm Arca stated that potential borrowers are searching for more such possibilities. "[This loan] indicates institutions' readiness to use new instruments with old procedures," it stated,  “It is far more likely that Goldman is seeing a lot of demand for this type of transaction and is just testing the waters before making a bigger splash.”

Coinbase’s decision to take the loan has received quite some comments from the Twitter community. Bitcoin podcaster Preston Pysh tweeted, “Did Coinbase just borrow with BTC collateral!! No wonder the SEC is hiring people.”

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