Coinbase to Stop Providing New Crypto Loans in the US
- Crypto exchange Coinbase has announced that it will not be providing new loans to its customers in the United States under its Borrow Service.
- Using the Borrow Service, customers of the exchange could get a loan of up to 40% of the value of their crypto.
- In an email sent to customers on May 3, the exchange revealed that customers will not be able to receive loans starting May 10.
- Existing loans will have no effect, and every user will have full access to the customer Borrow dashboard and loan history.
The leading crypto exchange in the United States, Coinbase, has decided to end all of its crypto lending services in the region due to the unclear and uncertain regulatory practices of the Securities and Exchange Commission (SEC). More importantly, the company is also planning to move its headquarters out of the country because of the recent crackdown that the securities regulator has conducted under the leadership of Chairman Gary Gensler against crypto-focused companies.
Coinbase has announced that it will stop the issuance of new loans via its Borrow Service, which allows crypto investors to use their crypto as collateral and receive cash for their usage. Interestingly, the leading crypto exchange sent an email to its various crypto clients on May 3 stating that it is winding down its crypto lending and borrowing operations in the region.
It is important to note that the crypto exchange did not give a reason for the same and announced that, starting May 10, all customers in the US would not be able to take out new loans using Coinbase Borrow. However, the exchange also confirmed that there will be no impact on the existing loans that the customers have on the crypto trading platform, while adding that every user will have full access to the customer Borrow dashboard and loan history.
Users speculated that it is possible that Coinbase is not making any money on its Borrow services or that it could be facing regulatory action for the same. “We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most,” a spokesperson told CoinTelegraph.
The Coinbase Borrow service allows the customers of the crypto exchange to borrow up to 40% of the value of their crypto in cash, with a limit of $1 million imposed on the same. No client was allowed to borrow more than $1 million, a limitation imposed for unknown reasons. An important aspect of this service was that no credit check was needed for the loan, and users paid a nearly 9% annual percentage rate for the service.
This announcement from Coinbase comes at a time when there is a significant struggle between the crypto exchange and the SEC. The regulator issued a Wells Notice to the company earlier this year regarding its staking services, adding that it considered them securities since users’ expected some kind of profit while investing in them.
This email from the only publicly-listed crypto exchange in the United States comes just before the financial disclosure for the quarter, which is expected to come on May 4. However, as reported previously by Bitnation, the San Francisco-based company founded in 2012 has been making some huge decisions recently and debuted the new Coinbase International Exchange (CIE) that will serve as a digital platform for crypto trading.
The company is listing both Bitcoin (BTC) and Ether (ETH) perpetual futures this week, and trading on CIE will not require fiat on-ramps as it will be conducted using the USDC stablecoin. Furthermore, the crypto exchange is also interested in purchasing the assets belonging to the bankrupt crypto lending platform, Celsius Network, according to previous reports.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
