GMO wants its customers to loan bitcoins to it, which it will pay back to them with interest.
21 mins ago
One of the company’s put on notice by Japanese regulators in March is now asking its customers to lend their bitcoins to it.
The fairly interesting request is coming from Japanese-based GMO. The internet company is one of seven that was cited for failing to comply with the country’s government standards on customer protection.
The loan request is part of a program that resembles one launched by Coincheck last year. If you recall, that exchange was hacked.
Here, we’ll go over some of the details we’ve learned about the program.
How the program works
GMO’s program would allow it to enter into loan agreements with its customers.
Customers can lend their bitcoins in units of 10 BTC, which is the minimum. They can lend up to 100 bitcoins.
Once an agreement has been reached with the company, the customer’s Bitcoin balance will be deducted.
The loan period is 90 days. If the customer wants to cancel the loan before the 90 days are up, they will be subject to a cancellation fee. Loans that are held for the entire 90 days will be repaid with interest.
According to reports, a caveat of the loan program is that during the term of the loan, the customer can’t sell or transfer their bitcoins.
It’s unclear how GMO plans to use the loan proceeds.
GMO’s past troubles
We recently reported how Japan’s Financial Services Agency (FSA) put on notice seven digital currency exchanges, demanding that two of them halt operations.
This was part of the regulator’s efforts to beef up consumer protection after the theft of $530 million worth of digital coins from Coincheck. The heist was considered to be the largest to date.
While GMO was not one of the companies demanded to halt operations, it was ordered to improve its operations. In addressing the business improvement order, GMO is setting up a risk management system, among other things.
According to reports, the company has also analyzed and investigated what caused system failures, and it is working to adopt countermeasures to deal with them.