Coincheck Reopens Lending Service with 11 More Cryptocurrencies
The bitcoin lending service has resumed at Japanese exchange Coincheck, with the addition of eleven more cryptocurrencies that the exchange’s customers can lend out. Also read: Bitcoin to Be Accepted at 260,000 Stores in Japan by This Summer Extending Lending Service to 11 Cryptocurrencies Last month the Tokyo-based bitcoin exchange Coincheck launched a bitcoin lending […]
The bitcoin lending service has resumed at Japanese exchange Coincheck, with the addition of eleven more cryptocurrencies that the exchange’s customers can lend out.
Extending Lending Service to 11 Cryptocurrencies
Last month the Tokyo-based bitcoin exchange Coincheck launched a bitcoin lending service called Coincheck Lending. Bitcoin.com reported that soon after the launch, the company paused the service while working with the Japanese Financial Services Agency to comply with regulations.
Over one month later, the exchange announced on Friday that this service has resumed with 11 more cryptocurrencies added. In addition to bitcoin, users can lend ethereum, ethereum classic, lisk, factom, monero, augur, ripple, zcash, nem, litecoin, and dash. “A user can now lend all cryptocurrencies that are listed on our exchange,” Coincheck Business Development Lead Kagayaki Kawabata told Bitcoin.com.
There is an approval process that customers must go through first in order to start lending. To get started, they need to open a lending account, deposit the cryptocurrency of their choice and apply to be a lender.
Possible Risks Involved
Coincheck outlined on its website various risks associated with using this service. Firstly, the exchange pointed out that the price of a user’s underlying cryptocurrency fluctuates, so the value of all lent cryptocurrency may be different when it is returned.
Secondly, users wanting to use the service “must agree with the consumption loan agreement, which is an unsecured contract,” the exchange detailed. “Hence, users have a risk not being able to receive lent cryptocurrencies in a case when Coincheck [is] bankrupt.”
Thirdly, the lent funds are locked in and users can neither sell nor transfer them until the end of the term, or when Coincheck decides to return them. If lending is terminated earlier than the user’s preferred term, a prorated yearly rate will be paid. Moreover, “this service is not a deposit item,” the exchange clarified, adding that “it is not subject to deposit insurance.”
Demand and Earnings Potential
Kawabata believes there is a strong demand for this new service in Japan. “Coincheck Lending will definitely be a new alternative for Japanese citizens where they can earn extra profit,” he shared with Bitcoin.com, noting that:
Due to the negative interest rate policy in Japan, Japanese citizens can’t earn interest just by saving their money. I think people are looking for an alternative where they can increase their savings. The recent price hype of cryptocurrencies has attracted ordinary users to the market.
The rate of return for the loan depends on how long the cryptocurrency is tied up for. Coincheck offers four fixed terms; 14 days, 30 days, 90 days and 365 days. For all cryptocurrencies, the annual interest rates are 1%, 2%, 3% and 5% respectively. All interest is paid at the end of each fixed term. If a user deposits 10 bitcoins, locking them in for 90 days, a 3% annual interest rate will be earned. At the end of the term, the lender will receive an additional 0.0739726 bitcoin, Coincheck detailed.
Do you think Coincheck’s cryptocurrency lending service will be popular? Let us know in the comments section below.
Images courtesy of Shutterstock and Coincheck
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