Mercado Bitcoin, one of the largest crypto exchanges in Brazil, has launched a new product – loans secured by cryptocurrency in Brazilian reais.
Introduction of the New Product
Mercado Bitcoin, a leading cryptocurrency exchange in Brazil, has announced a crypto-collateralized loan product that will be paid in national currency to its users. This is the first product of its kind offered by the company, which received a payment institution license from the central bank last year.
Lending Features
To avoid high risks associated with liquidations, Mercado Bitcoin will limit the loans to 30% of the cryptocurrency held by users in the exchange. This translates into a credit capacity of over $300 million, given that over $900 million are under exchange custody. The credits will have an interest rate of 1.39% per month, one of the lowest rates for collateralized loans in Brazil, and only accept bitcoin and ether, the two largest cryptocurrencies by market capitalization. Other cryptocurrencies might be added at a later date.
Benefits for Users
Mercado Bitcoin stated that it would not liquidate customers’ collateral automatically. The exchange will seek to negotiate the execution and extend the client collateral until 35% if needed on a case-by-case basis, according to its CFO, Andre Gouvinhas. This flexibility differentiates the platform from its decentralized finance counterparts, which execute liquidate users’ funds obeying smart contract logic. The credit can be used to purchase crypto on the platform. Mercado Bitcoin also allows users to withdraw these loans in national currency for other purposes.
Mercado Bitcoin’s new product can help users obtain liquidity without selling their crypto assets, offering greater flexibility and reduced costs.
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