Coinbase Offers $1.5 Billion Worth of Junk Bonds, Receives Over $7 Billion Worth of Orders — What This Mean For Crypto

Coinbase, the largest cryptocurrency exchange in the US, has witnessed exceptional demand for its junk bond offering. The firm initially intended to offer $1.5 billion worth of junk bonds, but following an enormous demand, increased the size of its offering by one-third to $2 billion.

As per a report by Economic Times, the firm received at least $7 billion worth of orders for equal amounts of 7 and 10-year bonds at interest rates of 3.375% and 3.625%, respectively. The report also mentions that the received interest offers were lower than the initial quotes offered by Coinbase.

“The strong demand is clearly a big endorsement by debt investors,” said Bloomberg Intelligence analyst Julie Chariell.

It is worth mentioning that Coinbase is not the first crypto-centered company that has witnessed such a huge demand for its junk bonds offering. Previously, in June, when MicroStrategy decided to sell junk bonds to fund the purchase of more Bitcoin, the company received unrivaled interest.

According to a press release by MicroStrategy, the company initially intended to sell $400 million worth of junk bonds. However, the company received $1.6 billion in interest, 4x more in demand than the offering. 

Considering that the exceptional demand comes mostly from institutional investors, it is a clear indication that cryptocurrency is on the right track to achieving mainstream adoption. Moreover, this can also mean that more investors believe in crypto, but for some reason, they don’t get directly into it. 

SEC Threatens to Sue Coinbase Over its “Lend” Program

Interestingly, the high demand came even after the U.S. Securities and Exchange Commission (SEC) warned to sue Coinbase over its yet-to-be-launched “Lend” program.

Last week, Coinbase CEO Brian Armstrong informed his 800k Twitter followers that some “sketchy behavior [is] coming out of the SEC recently.” Armstrong detailed that Coinbase aimed to launch a version of a yield-earning product, as many other crypto firms have been offering.

The program, if launched, would enable users to earn returns by lending funds in USD Coin (USDC), ostensibly a win-win situation. Compared to the nearly-zero interest rates that banks currently offer, the Coinbase Lend program would be pretty generous, offering 4% annual yield returns on deposits of the USD Coin (USDC) stablecoin.

Armstrong emphasized that SEC refuses to further detail on the subject. “They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why,” he said.