Another government-approved Japanese cryptocurrency exchange has launched a program to borrow cryptocurrencies from its members. The exchange seeks to borrow 1 BTC or more. Initially, only BTC will be borrowed, but the exchange plans to add other cryptocurrencies including BCH, XRP, ETH, and LTC.
Bitbank Will Pay for Crypto Loans
Bitbank is one of the 16 fully-licensed cryptocurrency exchanges in Japan. Announcing a new service on Friday for customers to rent out their cryptocurrencies, the company explains:
‘Virtual Currency Lending’ is a service that allows customers to enter virtual currency lending transactions with Bitbank and receive up to 5% virtual currency per year…When we reach the expiration date of one year, we will reimburse by adding the specified usage fee to the virtual currency lent by customers in the month of offering.
Members with an account at Bitbank can start using this service, the exchange detailed, adding that only BTC can be rented out currently, “but we will also sequentially support other virtual currencies” such as “ripple, litecoin, ether, monacoin, bitcoin cash etc.”
“In principle, the virtual currency lent by the customer is locked until the predetermined loan period has elapsed,” therefore it cannot be sold or transferred “unless the loan term expires or we return it,” Bitbank described.
The loan period is 12 months. Before the loan period begins, Bitbank will hold a “recruitment month” for customers to apply for the program. For example, “If the recruitment month is January 2018, the period of use fee will be from February 1st to January 31st, 2019,” the exchange clarified.
“The usage fee is calculated by the quantity of the target virtual currency in which the transfer was made within the period for each recruitment month,” Bitbank elaborated. The minimum amount the company will borrow is 1 BTC and the maximum is 25 BTC. Bitbank will pay 3 percent to borrow any amount less than 5 BTC, 4 percent for an amount of 5 BTC but less than 10 BTC, and 5 percent for an amount 10 BTC or more.
If customers cancel the loan contracts mid-way, a five percent fee, which includes applicable taxes, will be levied.
Competing with GMO
Another fully-licensed Japanese crypto exchange, GMO Coin, operated by GMO Internet, launched a similar service in April. Initially, only BTC was supported but the company extended its offerings to BCH, ETH, LTC, and XRP earlier this month.
GMO’s loan terms are 90 days for BTC and 150 days for other coins, which are shorter than Bitbank’s terms. In addition, GMO seeks to borrow a larger amount of coins, from 10 BTC to 100 BTC, paying a fee of 5 percent for all loans.