Coinbase to Shutter Bitcoin Lending Service Next Week
Coin basethe leading cryptocurrency exchange in the United States based on volume, announced that it will discontinue its loan product, Coinbase Borrow, starting next week.
The company will stop issuing new loans from May 10, although current users of the product will not be affected as their loans will remain active until maturity.
“We regularly evaluate our products to ensure we are prioritizing the offerings our customers care about the most,” a Coinbase spokesperson said Decrypt. “Effective May 10, we will stop issuing new loans through Coinbase Borrow. There is no impact on customers’ outstanding loans and no action is required from them at this time.”
Launched in November 2021, Coinbase Borrow allows users from certain US states to borrow up to 1 million dollars use Bitcoin (BTC) as collateral.
Customers can borrow up to 40% of the value of Bitcoin in their accounts at an annual interest rate of 8.7%, according to the exchange’s website.
No relation to regulatory pressure, says Coinbase
The exchange has also indicated that the shutdown of Coinbase Borrow has nothing to do with the potential enforcement action that could be taken after the US Securities and Exchange Commission (SEC) issued the exchange a Wells notice in March.
A Wells Notice is a letter that the SEC sends when it is considering initiating an enforcement proceeding. The notice gives the recipient an opportunity to respond to the agency’s allegations and explain why they believe enforcement is not warranted.
In Coinbase’s case, the Wells Notice alleged that the company’s investment products constitute unregistered securities, while mentioning several other aspects of the exchange’s activities, including the Coinbase Wallet.
In response to the SEC’s Wells Notice, Coinbase stated that it does not list securities, the Coinbase Wallet product does not constitute a broker, and the exchange’s betting services have nothing to do with a securities offering.
Last week, the San Francisco-based exchange also revealed that it was suing the SEC over its “regulatory petition” that was sent to the regulator last July and remains unanswered. The lawsuit aims to get the agency to respond to Coinbase’s plea for clearer crypto regulations.
In a separate development earlier this week, Coinbase has launched a new international exchange that will initially offer Bitcoin and Ethereum perpetual futures, with trades settled in USD Coin (USDC).
