Cryptocurrency exchange Coinbase has quietly introduced an institutional-grade crypto lending platform, Coinbase Prime, for U.S. investors. This move comes as the exchange seeks to capitalize on issues plaguing the crypto lending market.

Coinbase Prime: A Full-Service Solution

Coinbase Prime is designed as a comprehensive prime brokerage platform for institutions, offering services like asset custody and trade execution. It further allows institutions to lend digital assets to Coinbase under standardized terms, qualifying for a Regulation D exemption.

Data from a SEC filing by Coinbase Credit. Source: Coinbase SEC Filings

As per an SEC filing, Coinbase has garnered $57 million in investments from customers since the platform’s launch on August 28. The offering has attracted five investors by September 1.

Background and Regulatory Challenges

Coinbase’s new institutional lending platform follows the suspension of new loan issuance on Coinbase Borrow in May 2023. The previous lending program enabled users to borrow up to $1 million against Bitcoin collateral.

Coinbase has been embroiled in regulatory challenges, with the SEC alleging the exchange of offering unregistered securities through its crypto staking services. While Coinbase contested these allegations, it temporarily paused its staking program in four states.

The crypto lending industry faced significant turbulence in 2022, witnessing the downfall of major companies like BlockFi, Celsius, and Genesis Global due to a lack of liquidity exacerbated by the bear market. These events have underscored the need for addressing issues tied to short-term assets and liabilities in the crypto lending secto