Seychelles-based crypto exchange Bitget said in a July 4 press release that it had launched a cryptocurrency lending product.
Users can stake coins for more liquid assets.
Users of Bitget’s new Crypto Loans service will be able to stake coins that are in low demand. In return, Bitget will lend those users more liquid assets.
Bitget said that the lending product uses a “dual-coin approach.” Users who stake one cryptocurrency will receive a corresponding amount in another asset. It did not state which cryptocurrencies are eligible for this program.
The company added that each loan would have a specific interest rate and said that loan amounts are based on the market price of the user’s staked amount. It noted that borrowing periods are predetermined, though users can repay the loan early.
BitGet said it aims to provide “smooth onboarding” and has patterned its loan service after traditional financial services. It said that once users stake collateral, they will automatically receive the loan amount and can spend funds or adjust collateral.
The firm also said it supports withdrawals and offers a “swift review” of loan applications. It also described security guarantees without any further detail.
The crypto lending sector is growing but troubled.
BitGet suggested that digital lending is on the rise. It cited GMI data that shows the market was worth over $8.5 billion in 2022 and could grow by 20.5% by 2032.
Despite the company’s optimism, several cryptocurrency lending firms — most notably Celsius — began to fail in 2022 after failing to meet withdrawal demands.
It is unclear whether Bitget is vulnerable to such liquidity problems, as the firm’s lending service is intended to provide users with temporary access to additional funds rather than permanent rewards on staked funds. Bitget has not stated whether it plans to re-invest or use its customers’ staked funds.
It is also unclear whether BitGet’s lending service might be affected by U.S. regulations around crypto lending. Bitget has not stated whether it plans to offer its lending service in the U.S., though it obtained a license to provide other services in the U.S. in 2020.
Furthermore, the move comes at a time when several global bodies have recently banned crypto exchanges from offering loans, including Singapore and Thailand, on July 3.
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