Users will have the opportunity to deposit specific coins and, in exchange, receive a corresponding asset as a reward.
Bitget, a crypto exchange based in Seychelles, announced the launch of a cryptocurrency lending product in a press release on July 4.
Through Bitget’s new Crypto Loans service, users will have the opportunity to deposit less sought-after coins. In exchange, Bitget will lend them more easily tradable assets.
Bitget described its lending product as utilizing a “dual-coin approach.” Users who deposit one cryptocurrency will receive a corresponding amount in a different asset. However, the specific cryptocurrencies eligible for this program were not mentioned.
The company also mentioned that each loan would come with an assigned interest rate. Additionally, the loan amounts would be determined based on the market price of the user’s staked assets. Bitget clarified that borrowing periods are pre-established, but users have the flexibility to repay the loan ahead of schedule if they choose to do so.
BitGet intends to offer a user-friendly onboarding experience and has designed its loan service to resemble traditional financial services. Once users deposit collateral, they will receive the loan amount automatically. They can then utilize the funds or make adjustments to their collateral as needed.
The company also mentioned that it facilitates withdrawals and ensures a quick review process for loan applications. It highlighted security guarantees, although specific details were not provided.
The crypto lending sector is experiencing growth but faces challenges:
BitGet indicated that digital lending is witnessing an upward trend. According to GMI data, the market was valued at over $8.5 billion in 2022 and is projected to grow by 20.5% by 2032. However, despite BitGet’s positive outlook, some cryptocurrency lending firms, particularly Celsius, faced challenges in 2022 due to their inability to fulfill withdrawal requests.
It is uncertain if BitGet is susceptible to similar liquidity issues since its lending service aims to offer users temporary access to extra funds instead of permanent rewards on staked funds. BitGet has not disclosed its intentions regarding reinvesting or utilizing its customers‘ staked funds.
Additionally, it remains uncertain whether BitGet’s lending service could be impacted by U.S. regulations pertaining to crypto lending. BitGet has not indicated whether it intends to offer its lending service in the U.S., despite obtaining a license to provide other services in the country back in 2020.
Moreover, BitGet’s decision to launch its lending service coincides with recent bans by several international entities, such as Singapore and Thailand on July 3, which prohibit crypto exchanges from providing loans.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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