Resume:
- Coinbase users can no longer borrow up to $1 million using Bitcoin as collateral.
- The crypto exchange plans to discontinue the lending program from May 10, 2023 due to insufficient demand for the product.
- Wednesday’s decision also comes amid a battle between US regulators and crypto companies such as Coinbase, Kraken and Binance.
Coinbase users will no longer be able to access cash loans backed by Bitcoin as the company looks to settle its Borrow product.
According to a email sent to users on Wednesday, the crypto exchange plans to discontinue its lending program from May 10 this year. The move will not affect outstanding loans, but users will not have the option to take out new loans.
As of May 10, 2023, customers will no longer be able to take out new loans with Coinbase Borrow. There is no impact on your outstanding loans and no action is required at this time. You will continue to have access to your loan history and the full loan dashboard.
Coinbase US users were introduced to the Borrow product in August 2020. The program only launched more than a year later in November 2021, giving users an option to access cash without liquidating their BTC holdings.
Users in some US states were allowed to borrow as much as $1 million against their Bitcoin balance at an annual percentage rate (APR) of 8.7%.
Interest in the product has seemingly waned in the two years since its launch. A Coinbase spokesperson noted that the reduced interest rate was the main reason for closing the lending program.
“We regularly review our products to ensure we prioritize the offerings our customers care about most,” said the spokesperson.
Coinbase embroiled in defiance of US regulators
While regulatory concerns were not the main reason for Wednesday’s decision, the move comes amid tensions between US regulators like the SEC and crypto companies.
The U.S. Securities and Exchange Commission issued a Well Notice to Coinbase in March alleging violations of securities laws. In response, the crypto exchange sued the SEC to force Gary Gensler’s committee to clarify regulations governing the crypto industry.
Coinbase is also looking at offshore options. The company recently launched a derivatives exchange in Bermuda.