Coinbase is expanding its cryptocurrency-backed lending product in the US to include XRP, Cardano ADA and expanding access to a service it has pitched as a way for clients to unlock liquidity without selling their holdings.
The product allows users to post cryptocurrencies as collateral and borrow up to $100,000 in Circle’s USDC stablecoin. Lending is routed through Morpho, a decentralized lending protocol, meaning the mechanics of lending are handled on-chain rather than through Coinbase’s own balance sheet.
The service is available throughout the United States, except New York.
The move adds some of cryptocurrency’s most retail tokens to a product that previously focused on bitcoin and ether. While Ethereum and Cardano holders can already earn yield by staking on their native networks, assets like XRP, DOGE, and Litecoin do not offer built-in reward mechanisms.
For those investors, borrowing against their holdings has become one of the few ways to access liquidity without exiting the position.
Coinbase is also expanding the potential set of collateral on its platform. The exchange reported holding XRP worth $17.2 billion as of Dec. 31, according to an SEC filing, making the token one of the largest assets in customer accounts.
Cryptocurrency-backed loans have long been marketed as a tax-efficient strategy, since borrowing against an asset does not generate capital gains in the same way that selling does.
But the structure carries big risks when markets move quickly. If the value of the collateral falls too much relative to the loan, the position can be liquidated, meaning a third party can pay off the debt and take over the collateral at a discount.
Coinbase applies an additional buffer when users take out a loan to reduce liquidation risk and sends notifications as the threshold approaches. Still, the exchange also warned that the collateral used through the product is wrapped, a process that allows tokens like XRP to exist on Ethereum-compatible networks.
