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Cryptocurrency exchange ByBit is the latest major platform to deploy its own cryptocurrency lending service for users.
The Dubai-based exchange announced the launch of the service on May 2, providing interest payments to users who deposit crypto through the platform’s new offering. The service is advertised to pay out hourly interest payments from loan pools, while lenders can deposit and redeem loaned cryptocurrency tokens without lock-up periods.
Meanwhile, borrowers on the ByBit exchange can take out loans to use the funds for various trading options on the platform. Borrowers must post an equal or greater amount of collateral assets relative to the loan amount to protect lenders’ investments.
A statement from ByBit CEO and co-founder Ben Zhou outlined the intention of the cryptocurrency exchange to offer users a means to generate profits while experienced traders can access capital from lenders for more advanced trading options on the exchange.
ByBit is the latest major cryptocurrency exchange to offer a cryptocurrency lending service. Binance offers several services that allow users to earn interest on deposited crypto assets.
KuCoin is another top five cryptocurrency exchanges in terms of trading volume, offering lending services for a wide variety of tokens. OKX offers users a loan that allows users to borrow funds on deposited tokens, but does not make it easy for users to lend on their exchange platform.
Related: DeFi is transforming blockchain lending routes
U.S. cryptocurrency exchange Coinbase has abandoned plans to launch its own lending service in September 2021 following a strong warning from the U.S. Securities and Exchange Commission. The US regulator considered this offer a security, and Lend promised a yield of 4% per year on deposits in US dollars (USDC).
Kraken violated regulations in the US, which eventually led to a $30 million settlement with the SEC over the operation of its Crypto Asset Placement as a Service program in February 2023.
While only a few major cryptocurrency exchanges offer customized lending services, the decentralized finance (DeFi) space provides many opportunities for cryptocurrency users to earn interest on lent digital assets.