Impact of The Decision
The discontinuation of Coinbase Borrow will not impact existing loans, which will still be repaid according to their agreed terms and conditions. The decision will, however, affect new loan requests, which will not be accepted after May 10th.
Coinbase Halts Bitcoin-Backed Cash Loans Amid Regulatory Pressure
• Coinbase is halting its Bitcoin-backed cash loan service, Coinbase Borrow, effective May 10th.
• The decision comes amid increasing regulatory scrutiny of the exchange.
• Existing loans will still be repaid according to their agreed terms and conditions.
Coinbase Halts Bitcoin-Backed Cash Loan Service
The US crypto exchange Coinbase announced on Wednesday that it would halt its Bitcoin-backed cash loan service, Coinbase Borrow, effective May 10th. The service allowed customers in some US states to borrow up to $1 million against their BTC holdings, without any credit check. The annual interest rate for the loan was 8.7%.
Reason For Halting Service
Coinbase did not provide any specific reason as to why they were discontinuing this service but mentioned that they regularly evaluate their products and prioritize them according to customer preferences. This decision comes amidst increasing regulatory scrutiny of the exchange by the US Securities and Exchange Commission (SEC).
SEC’s Wells Notice To Coinbase
In March this year, the SEC sent a Wells Notice to Coinbase over its staking and asset listings practices. In response, Coinbase CEO Brian Armstrong asked the regulator to identify which assets listed on their platform are classified as securities but received no response from them.
Impact On Outstanding Loans
Coinbase stated that users with outstanding loans on their platform would still have to repay them in accordance with the agreed terms and conditions of their loans. They also clarified that this decision does not affect those users in any way and so there would be no changes for those who have already taken out a loan from them using BTC collateral.
It remains unclear why exactly Coinbase has decided to stop offering its Bitcoin-backed cash loan service but it is likely due to increased regulatory scrutiny of exchanges like theirs by governing bodies such as the SEC. Existing loans will still remain unaffected and borrowers will need to continue making repayments according to their agreement with Coinbase Borrow until such time when these loans are fully paid off or otherwise terminated earlier than expected by both parties involved.