Coinbase to halt issuing new loans through Coinbase borrow
US-based crypto exchange Coinbase will no longer issue new loans through the Coinbase Borrow service.
Coinbase Borrow allows users in certain US states to take out fiat loans of up to $1 million without credit checks. Users could post up to 40% of the bitcoin in their accounts as collateral for the loan, with an annual interest rate of 8.7%.
In an email sent to customers on May 3, the exchange announced that the service would be terminated as of May 10. There will be no effect on outstanding loans, and customers have been advised that they do not need further action.
The backdrop of regulatory pressure
This move comes amidst what many have viewed as a regulatory crackdown on crypto firms in the US since the beginning of the year. In March, the US Security and Exchanges Commission (SEC) issued Coinbase with a Wells notice.
Coinbase has since sued the SEC on April 24, asking for the regulator to answer a petition from July 2022 on whether the crypto industry would be regulated using existing SEC frameworks.
The exchange then launched a non-fungible token (NFT) campaign- the “Stand With Crypto”- on April 28 to promote implementing favorable crypto policies.
Coinbase has not made any public statements on official reasons for the closure of its borrowing service, so any connection to regulatory oversight can only be speculated.
The exchange expressed that the decision is based on evaluating its products to ensure customers access offerings they care about the most.
Launch of Coinbase International Exchange
This decision also comes following the recent launch of Coinbase’s global derivatives platform, Coinbase International Exchange (CIE), on May 2. The company joined another major crypto exchange, Gemini, which launched a similar platform a day before.
Coinbase has made several significant moves as it heads to its first quarter result announcement expected on May 4.
Since mid-April, the company’s COIN prices have steadily fallen by about 30%, currently at $48.88, with a 2023 high of $84 in March.