Coinbase and Goldman Sachs join forces for the first Bitcoin-backed loan
Coinbase, one of the largest crypto exchanges, used Bitcoin as collateral for a cash loan with Goldman Sachs; conditions related to the number of loans or interest rates are not disclosed at this time.
The loan was initiated by Goldman Sachs as the bank’s first loan backed by cryptocurrencies, specifically Bitcoin.
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Crypto as collateral
You can now apply for a loan with cryptocurrencies as collateral. If possible.
The loan to Coinbase would have been the bank’s first Bitcoin-backed loan. The amount and security are still unknown at the time of publication.
The collaboration between Coinbase and Goldman Sachs has opened the doors for banks or fiat currency and cryptocurrencies to co-exist and thrive in the economy.
Although there are Bitcoin-backed loans facilitated on other platforms such as Genesis Trading Fund with Signature Bank and Silvergate, this is an innovative partnership as Goldman Sachs is not a cryptocurrency or blockchain company and is actually a large traditional financial institution.
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Matthew Ballensweig, CEO of Genesis (crypto loans and transactions), shares that the standard terms for Bitcoin loans would be a loan-to-value ratio of 40% to 60%. Goldman Sachs is a relative newcomer to the bitcoin space; specifically in loans protected or guaranteed with BTC.
Total crypto market capitalization at $1.71 trillion on the daily chart | Source: TradingView.com
However, the company has already experimented with BTC processes since March with an undeliverable BTC option or a bilateral agreement that pays borrowers in cash. The transaction was initiated by Galaxy Digital Holdings, a leading crypto financial service established by a former Goldman Sachs partner.
Coinbase-Goldman Sachs Alliance
Who would have thought that there would come a time when you could apply and get a cryptocurrency backed loan?
Interestingly, Goldman Sachs may have been watching the growing demand for crypto loans in different industries around the world and wanted to test the waters before jumping into the next big wave. And they did.
Furthermore, Goldman Sachs was sensational after backing Coinbase with its first BTC-backed loan in April.
Now, the two companies have teamed up for the first BTC-backed loan that will change the way bank loans are made now and in the future.
In fact, Goldman Sachs offering Bitcoin-backed loans is a strategy to accelerate and drive the global adoption of cryptocurrencies.
Bullfrag Featured Image, TradingView.com Chart
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