Coinbase Discontinues Bitcoin-Backed Loans via Borrow Service
One of the best cryptocurrency exchanges in the world Coinbase, discontinues Bitcoin-Backed Loans via Borrow service. This service allows certain US customers to post their Bitcoin as collateral to receive a cash loan of up to $1 million with no credit check. The statement was made in an email sent to Coinbase Borrow customers on May 3.
Details of Announcement
According to the email, starting May 10, customers will no longer be able to take out new loans with Coinbase Borrow. The email did not provide a reason for the decision but stated that there would be no impact on outstanding loans. Therefore, customers did not need to take any further action.
Coinbase’s Borrow service allows users to borrow up to 40% of their Bitcoin holdings with a limit of $1 million. The service requires no credit check, and users pay nearly 9% annually.
While the email did not explain why the service is being discontinued, Coinbase said t regularly evaluates its products to ensure it prioritizes offerings that customers care about most.
Regulatory Scuffle with SEC
Coinbase discontinues Bitcoin-Backed Loans via Borrow Service Amid a regulatory scuffle with the US Securities and Exchange Commission. In March, the SEC sent Coinbase a Wells notice, which the exchange said concerning possible violations of securities laws.
Coinbase Shares Downgraded by Investment Analyst
Investment analysts from it downgraded Coinbase shares from buy to neutral ahead of the exchange’s Q1 earning announcement. Analysts from Mizuho also reportedly maintained their underperforming rating on Coinbase. Furthermore, they said its fundamentals remain weak due to lower average daily trading volumes.
Coinbase International Exchange
Earlier this week, Coinbase launched the Coinbase International Exchange (CIE). It’s a derivate trading platform that allows users to trade perpetual swaps, futures, and options on various cryptocurrencies.
This step comes amid a seeming crackdown on cryptocurrency firms in the US. It may signal Coinbase’s desire to expand its global reach.
Conclusion
Coinbase discontinues Bitcoin-Backed Loans via Borrow Service is surprising. It was one of the exchange’s most popular products. However, with further explanation, it is clear why Coinbase has made this step. Additionally, the regulatory scuffle with the SEC and the downgrading of Coinbase’s shares by investment.
Nevertheless, Coinbase’s decision to expand its global reach with the launch of the CIE derivatives trading platform could signal the exchange’s willingness to weather the storm and continue to grow.