As Coinbase leans into its Bitcoin-backed lending product, the exchange is offering customers competitive rates by connecting them with lightly vetted pools of capital, which don’t require people to provide personal information before funds are disbursed to Americans.

Although the exchange’s competitors have attained state-by-state licenses to provide similar services, Coinbase’s product isn’t subject to the same potential barriers because the company is acting as a technology provider—and not lending customers’ assets itself.

Instead of doing business with Coinbase, the exchange’s customers, through Coinbase’s mobile app, are depositing funds into decentralized finance protocol Morpho. On Morpho’s platform, they can post Bitcoin as collateral for loans in Circle’s USDC. Alternatively, Coinbase’s customers can deposit USDC into Morpho to earn yield.

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Author: André Beganski