Binance Launches into Crypto-Lending Business

Crypto giant – Binance – announced that it would be rolling out its digital asset lending system.  The platform will allow investors to burrow their Binance coin (BNB), Ethereum Classic (ETC) and Tether (USDT). 
Announcing via a blog post, Binance said explained that its new initiative will allow investors to let their idle digital assets work for them. Investors will now earn a passive income by lending out their assets over a fixed term.  
The initiative is very attractive. Interest rates also vary with which asset is borrowed. Binance’s cryptocurrency, BNB, comes with the juiciest interest payout at 15%.  

The first lending phase will be conducted on a first-come-first-served basis. Assets that are lent out mature after 14 days. Investors are guaranteed immediate interest pay out after the loan matures. First round loans are payable from Aug. 29 to Sept. 11. 

Despite these guarantee, several analysts as well as experienced investors remain skeptic. They argue that the volatile nature of digital assets is an important factor. Interests cannot be guaranteed because the market cannot be predicted.  
Binance CEO countered with an explanation. He tweeted that “lending at Binance goes to margin borrows who have to pay interest on their positions.  This makes it easy to guarantee a fixed interest payout to lenders.” He argues that because lending goes to margin borrowers. Thus the new initiative is different from guaranteed-return schemes.  

Binance is one of the world’s largest cryptocurrency exchanges by trading volume. No doubt, this lending business is a strategy to attract customer deposits. For now, users will be able to lend their U.S. dollar-pegged USDT, Ethereum classic (ETC) and Binance’s BNB. The annualized interest rate is set at 15%, 10% and 7%, for BNB, USDT, and ETC, respectively.