Bybit is the latest major platform to launch an internal cryptocurrency lending service for its users.
The Dubai-based exchange announced the launch of the service on May 2, offering interest payments to users who deposit crypto through the platform’s new offering. The service offers hourly interest payments from loan pools, while lenders can deposit and redeem the borrowed crypto tokens without lock-up periods.
For their part, Bybit borrowers can apply for loans to obtain funds for various trading options on the platform. Borrowers are required to put up an equal or greater amount of collateral relative to the loan amount to safeguard lenders’ investments.
A statement from Bybit CEO and co-founder Ben Zhou outlined the cryptocurrency exchange’s intent to offer users a means to generate returns. More experienced traders can access capital from lenders for more advanced trading options on the platform.
Bybit is the last major exchange to offer a cryptocurrency lending service. Binance offers a handful of services that allow users to earn interest on deposited crypto assets.
KuCoin also offers a lending service on a wide variety of tokens. OKX offers users a lending service that allows them to borrow funds against deposited tokens, but does not facilitate borrowing for users on its trading platform.
United States-based cryptocurrency exchange Coinbase has abandoned plans to launch its own lending service in September 2021 following a stern warning from the United States Securities and Exchange Commission. The US regulator had deemed the offer a security, as Coinbase promised a 4% annual return on USD Coin (USDC) deposits.
Kraken also fell into the trap of overstepping regulatory limits in the United States, ultimately leading to a $30 million settlement with the SEC over running its crypto asset staking program as a service in February 2023.
While only a handful of major cryptocurrency exchanges offer bespoke lending services, the decentralized finance (DeFi) space presents myriad avenues for cryptocurrency users to earn interest by lending their digital assets.
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