Key takeaways:
- Goldman Sachs partnered with Coinbase for the Wall Street’s first Bitcoin-collateralized loan
- The exact loan amount, duration, or repayment model of the loan is not known
- Coinbase held $183 million worth of Bitcoin at the end of 2021, according to Bloomberg
Goldman Sachs accepts Coinbase’s BTC as collateral for a cash loan
Cryptocurrency exchange Coinbase has borrowed an undisclosed amount of cash from investment banking giant Goldman Sachs by collateralizing the loan with Bitcoin, according to a report from Bloomberg.
While Bitcoin-backed loans are common in the crypto space, they are a novelty in traditional finance circles. Head of Coinbase Institutional Brett Tejpaul commented on the Wall Street’s first BTC-collateralized loan:
“Coinbase’s work with Goldman is a first step in the recognition of crypto as collateral which deepens the bridge between the fiat and crypto economies.”
Goldman Sachs nor Coinbase revealed the recently issued loan’s borrowed amount, interest rate, loan duration, or repayment model. It is worth noting that companies in the cryptocurrency sector typically accept Bitcoin as collateral at a loan-to-value ratio of between 40% and 60%.
Per Bloomberg, Coinbase held $183 million worth of Bitcoin at the end of 2021, which could serve as some indication of the amount of funds Coinbase was able to provide as collateral to secure a cash loan from the banking giant.
Given its recent market predictions, Goldman Sachs seems to hold an optimistic outlook for the future of the crypto industry. Case in point, the bank published a note to its clients in January in which it outlined the case for Bitcoin reaching $100,000 and taking on gold.
