• Coinbase is halting its Coinbase Borrow service, which allows customers to borrow cash loans using Bitcoin as collateral.
• The halt of the service will take effect on May 10 and will not affect existing loans already running on the platform.
• The decision comes amid increased regulatory scrutiny of Coinbase by the US Securities and Exchange Commission (SEC).
Coinbase Halts Coinbase Borrow Service
The largest US crypto exchange Coinbase released a statement on Wednesday disclosing the halt of Coinbase Borrow, a service that allows the exchange to issue cash loans to US customers as they post BTC as collateral. The firm plans to stop issuing the new Bitcoin-backed loans effective on May 10. It added that the action would not affect customers’ outstanding loans already running on the platform. So, such users will still repay their loans in line with the agreed loan duration.
Details Of Coinbase Borrow
Coinbase Borrow is available only in some states in the US and it allows users to borrow loans up to $1 million while using Bitcoin as collateral. Moreover, there’s no credit check for borrowers. The service enables users to borrow cash loans to about 40% of the value of their BTC holdings. The service repayment schedule takes 8.7% as an annual interest rate from users.
Reason For Discontinuation Of Service
According to Bloomberg’s report, the exchange spokesperson mentioned that the firm regularly evaluates its products and such regular checks help the exchange to prioritize its services according to customers’ preferences. However, as of press time, the crypto exchange is yet to disclose an explicit reason for discontinuing its Borrow service.
Regulatory Scrutiny Around Coinbase
Coinbase’s decision to discontinue its Borrow service is coming amid increasing regulatory scrutiny around it by U.S authorities like SEC who sent a Wells Notice regarding staking and asset listings in March 2021 . The CEO Brian Armstrong had also revealed that they had requested SEC identify assets classified as securities listed on their platform but there was no response from them until now .
COIN Price Plunges On Chart
COIN price has plunged following this news , dropping 2 % against USDT at press time . This could mean investors are wary about potential repercussions due stricter regulations .