Such borrowers usually post Bitcoin at loan-to-value in the 40% to 60% range, according to Matthew Ballensweig, managing director and co-head of trading and lending at crypto prime brokerage Genesis. The collateral is held by a qualified custodian, and borrowers receive U.S. dollars from the lender at an agreed-upon interest rate.

As of the end of last year, Coinbase held more than $566 million of cryptocurrencies including more than $183 million worth of Bitcoin, according to its 2021 annual report. At the same time, the firm reported it had cash and cash equivalents of $7.1 billion, exclusive of restricted cash and customer custodial funds.