Coinbase Halts Bitcoin-Backed Loans – The largest US cryptocurrency exchange, Coinbase Global Inc., will cease making new loans using a platform that enables borrowing against Bitcoin.
The company announced in a statement late on Wednesday that it will stop accepting new loans through its service, Coinbase Borrow, as of May 10. The company also stated that there is no effect on consumers’ existing loans.
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A spokesman stated in the statement,
“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most,” the spokesperson said. “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.”
Only in specific US jurisdictions does Coinbase Borrow offer loans of up to $1 million with Bitcoin as collateral. According to the exchange’s website, customers can borrow up to 40% of the value of Bitcoin that is currently in their accounts at an annual interest rate of 8.7%. The borrowing program was cited as an illustration of how the cryptocurrency economy is being expanded by Chief Executive Officer Brian Armstrong.
On May 4, the company is scheduled to release its quarterly financial report despite the exchange’s continued regulatory uncertainties. The US Securities and Exchange Commission sent it a Wells Notice in March, indicating that it intended to sue the company over a number of its business operations.
When Coinbase Borrow first debuted in November 2021, it was promoted as a rapid option to obtain fiat loans without having to sell bitcoin, which would result in a taxed gain or loss.