The firm will stop providing new loans from May 10, even though existing users of the product will not be affected as their loans will continue to be active until their maturity
U.S.-based Coinbase, the top crypto currency exchange in terms of volume, declared that it will be stopping its lending product, Coinbase Borrow, from next week.
The firm will stop providing new loans from May 10, even though existing users of the product will not be affected as their loans will continue to be active until their maturity.
We routinely assess our products to make certain we are prioritizing the offerings that our customers care about most, a Coinbase spokesperson told Decrypt. Effective May 10, we will halt issuing new loans via Coinbase Borrow. There is no effect on outstanding loans of customers, and no action is needed from them at present.
Launched in November 2021, Coinbase Borrow permits users from specific U.S. states to borrow up to $1mln using Bitcoin as collateral.
Customers can borrow up to 40 per cent of the value of the Bitcoin in their accounts at an annual interest rate of 8.7 per cent, as per Coinbase website.
Coinbase has also indicated that the shutdown of Coinbase Borrow has nothing to do with the potential enforcement action after the U.S. Securities and Exchange Commission (SEC) served the exchange with a Wells Notice in March.
A Wells Notice is a letter that the Securities and Exchange Commission sends when it is weighing bringing an enforcement action. The notice provides the recipient the opportunity to respond to the allegations made by the SEC and explain why they believe enforcement action is not warranted.
In the case of Coinbase, the Wells Notice alleged that the firm’s staking products constitute unregistered securities, while also citing numerous other facets of the exchange’s activities, including the Coinbase Wallet.
In response to the Securities and Exchange Commission’s Wells Notice, the exchange stated it doesn’t list securities, its Coinbase Wallet product doesn’t constitute a broker, and Coinbase’s staking services have nothing to do with a securities offering.
During the previous week, the exchange also disclosed that it was suing the Securities and Exchange Commission over its “petition for rulemaking” that was sent to the regulator in July 2022 and still remains unanswered. The legal action aims to get the agency to respond to the exchange’s plea for clearer crypto regulations.
