Coinbase has announced the relaunch of its Bitcoin-backed loan service for U.S. users, marking a “significant milestone” in the integration of decentralised finance (DeFi) with traditional financial systems.
The service, available through a partnership with Morpho Labs, allows users to borrow USD Coin (USDC) by using their Bitcoin holdings as collateral.
This offering excludes residents of New York due to regulatory restrictions but is expected to impact the broader financial landscape significantly.
By enabling users to leverage their Bitcoin without selling it, Coinbase is aiming to provide “a new level of financial flexibility” for cryptocurrency holders who want to maintain ownership while accessing liquidity.
The move has sparked widespread discussion across online platforms, with industry experts and crypto enthusiasts highlighting its potential implications. Many view this as a step toward reshaping how individuals interact with their crypto assets, bridging the gap between traditional and decentralised financial ecosystems.
Critics argue the Bitcoin-backed loan service partially undermines the ethos of decentralised cryptocurrency. By requiring users to engage with a centralised platform and adhere to traditional financial regulations, the service reintroduces intermediaries and control mechanisms that cryptocurrencies like Bitcoin were originally designed to bypass.
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