GMO, a Japanese internet giant, has launched a new service that will allow clients to lend their BTC to the firm. After loan agreements have been reached, customers will have their BTC balances debited from their trading accounts. Hacked Japanese exchange, Coincheck, had also launched a similar program last year.
In a statement, GMO Coin, the crypto subsidiary of the company said that “Virtual Currency Rental Service makes it possible for you to rent out coins held by customers to the firm so you can receive rental fees according to the amount of the lent digital currency,”
Customers interested in the program may apply for participation between 11th April and 2nd May. The company says they’ll only support bitcoin for now. Customers will also be required to specify the amount they want to lend the firm in units of ten BTC. The minimum amount will be 10 BTC while the maximum will be 100BTC.
Rates and details
GMO Coin will then review all the applications made and inform applicants of its decisions. Once a customer reaches an agreement with the company, their BTC balance shall be deducted. However, the company says, if the customer does not have enough BTC balance required for debiting, the agreement will automatically be canceled. GMO Coin warns that “the price of BTC fluctuates when lending and borrowing, and that during the loan period, the lent virtual coins can’t be transferred or sold.”
The loan period will be 90 days, and on the date of settlement, “the firm will return the same amount and type of virtual currency borrowed to the customer, plus interest.” GMO Coin explained that customers are allowed to recall the loans early, and their coins will be redeemed within five business days of accepting the cancellation. However, the company will deduct some cancellation fee.
The firm stressed that customers will receive the loan interest on the date of settlement. “The 10 BTC rental fee is equal to 0.12328767 BTC, which is 5% per year including tax. Tax may also be levied on the loan fees,” the company elaborated.
Rental fee = (amount loaned x loan period x loan rate)/365, such that if a customer lent 10BTC for the 90 days, they are going to receive (10 bitcoins x 90 days x 5 percent)/365 which comes to 0.12328767 BTC.
Hacked Coincheck had launched a similar program
Various cryptocurrency exchanges across the world have also launched such lending programs. Hacked Japanese exchange, Coincheck launched a similar program in May 2017. Depending on the date the loaned cryptos would mature, customers could earn from 1 to 5 percent annual interest. The program started off with only BTC, but the firm would later add 11 more virtual coin options.
However, Japan’s FSA (Financial Services Agency) initially restricted Coincheck’s lending service, a move that saw the company re-launch the program in June. At present new registrations for the service are temporarily suspended.
But unlike Coincheck which has its exchange registration yet to be approved by the financial watchdog, GMO Coin has been fully licensed. However, the FSA recently issued the company a business improvement order.
