Coinbase Borrow Review and Cash Loan Rates in 2022

2022 Coinbase loan review and rates on direct line of credit to borrow cash with Bitcoin (BTC) balance collateral. We are paid by affiliate links on this website.

Can I borrow BTC, ETH, and Other Cryptocurrencies on Coinbase?

Coinbase is a secure online platform for buying, selling, transferring, and storing digital currency. As one of the most popular cryptocurrency exchanges globally, Coinbase offers its services to over 20 million customers in 32 countries. Coinbase's mobile app is also available on iOS and Android devices that allow users to buy or sell Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), among other cryptocurrencies.

Are you wondering if you can borrow BTC, ETH, or any other Cryptocurrencies on Coinbase? If so, then read our blog post!

Can I Borrow Cryptocurrencies on Coinbase?

Yes! Customers can access both a direct loan as well as a line of credit. For a loan, eligible users can borrow up to 30% of their BTC balance, up to $100,000. If the value of the underlying collateral BTC increases, then customers can borrow more.

For a line of credit, Coinbase allows eligible users to borrow up to 40% of their BTC balance up to $100,000. If the value of the underlying BTC increases, the user can borrow more up to 40% of the BTC value.

Coinbase Borrow Review

This borrowing is currently available to residents of AK, AR, AZ, CA, FL, ID, IL, NC, NE, NH, NJ, NY, OH, OR, TN, TX, UT, VA, WA, or WY. For other states, Coinbase is working to allow customers to access this same borrowing in the future. Connecticut residents can borrow but must be invited directly by email.

One piece of good news is that Coinbase does not currently conduct credit checks as part of borrowing eligibility.

Coinbase Borrow Cash

Coinbase Borrow Rates

Currently, Coinbase charges an 8% APR on lines of credit. Other fees are purely transactional based on the normal cost of moving funds.

Coinbase Promotion

$10 in Bitcoin for getting started with Coinbase.

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Does Coinbase Report Loans to Credit Agencies?

No. Coinbase does not report to any credit agencies at this time. A major reason for that is that these loans are heavily collateralized with BTC.

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When do I Need to Repay My Loan?

Users who opt for a line of credit or loan will need to pay regular monthly interest payments on the money borrowed. The remaining principal of the loan is due back within 12 months of the initiation date.

How is Interest Calculated and Accrued?

Interest is accrued daily and is based on 8% / 366 * principal. So if the loan principal was $10,000, for example, the interest would accrue at $2.19/day.

What is Loan Health?

For Coinbase, loan health is calculated by subtracting the standard term Loan-to-value (LTV) from 100%.

For example, if the underlying value of BTC in an account is $10,000 and the user takes out a loan for $3,000, the LTV would be 3,000/10,000 or 30%. Then taking the 30% and subtracting it from 100% (100-30) would yield a 70% loan health rating.

Because the loan health is based on an underlying asset that changes in value, users have to pay attention to the price of BTC at any given time to determine their loan health.

If the loan health falls below and remains below 40%, Coinbase will sell off some BTC to recover adequate loan health.

Coinbase Loan review

Special Terms and Conditions

If Coinbase does not receive timely payments on the loan and/or if the loan health value of BTC falls below 40%, then Coinbase will automatically sell off just enough BTC to restore the balance requirement.

If the sell-off happens due to a missed or late payment, Coinbase will add an additional 2% fee to the transaction.

There are no pre-payment penalties associated with either loan or line of credit products.

BTC Collateral

Collateral is the underlying asset that Coinbase holds to secure the loan. In this case, collateral must be held as BTC in the user account. No other cryptocurrencies in the account can contribute to the BTC collateral unless they are converted.

During the time of the loan or line of credit, the BTC collateral cannot be removed from the account.

If the loan health falls below 40%, users have 72 hours to add collateral to restore the 40% rule.

If the loan health surpasses 70%, users can withdraw excess collateral and use it as needed in their own wallets.

Coinbase Borrow Review Wrapping Up

Coinbase offers an easy-to-use borrowing product for eligible customers. The product is not subject to a credit check, has relatively soft terms and fees, and can be used to pursue crypto arbitrage positions.

Those who are interested in this product should be aware that the value of BTC is always in flux. Borrowers should pay attention to market forces and can lose money in failing to account for them, even if through no fault of their own.

Weigh the risks and rewards before entering this borrowing.

Coinbase Promotion

$10 in Bitcoin for getting started with Coinbase.

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Ben Wright
About the Author
Ben Wright is an investor, a trader, an educator, and something of an explorer. He spends his days in the markets when he is not teaching or spending time with his family. Ben writes about stockbrokers, markets, investment vehicles, promotional offers, and tools that help investors make the most of their time in the markets.