Xapo Bank is making waves in the crypto world by offering loans of up to $1 million, using Bitcoin as collateral. This is a big step towards mainstream acceptance of cryptocurrencies in traditional finance. However, UK and Australian customers are currently excluded from this service.
Big Banks Join the Crypto Game
Xapo Bank, known for its early adoption of crypto, is not alone. Major players like Cantor Fitzgerald are also diving into Bitcoin finance, partnering with crypto companies to expand their services. This shows how seriously traditional finance is taking crypto’s growing popularity.
Coinbase’s Comeback in Crypto Lending
Coinbase, after a brief hiatus, is back in the crypto lending game. They’ve partnered with Morpho Labs to offer loans of up to $100,000 in USDC stablecoins to US customers (excluding New York). This service is decentralized, using Coinbase’s Base network, and skips credit checks and fees. However, users need to monitor their collateral to prevent liquidation.
Centralized vs. Decentralized Lending: Two Sides of the Same Coin
Xapo’s approach is centralized – you need bank approval, and your Bitcoin is held in a vault until the loan is repaid. Coinbase, on the other hand, uses a decentralized model through DeFi protocols. Xapo’s CEO, Seamus Rocca, highlighted the need for a trustworthy approach, given past issues with “predatory lending” in the crypto space. Both methods offer a way for Bitcoin holders to access cash without selling their assets and triggering taxable events.
