American cryptocurrency exchange Coinbase is looking to shut down its Borrow program that allowed retail customers to receive fiat loans of up to $1 million against as much as 30% of their Bitcoin (BTC) holdings. The company intends to channel its resources to other products that users are more enthusiastic about.
Borrow Customers to Repay Loan for Four Months
Hence, customers who still have outstanding loans to offset through the Borrow program are required to repay their debt on or before Monday, November 20th, 2023.
Those who are not able to fulfil their loan obligation before the said date will have their BTC collateral confiscated and some to close the loans, based on the email sent to customers. This is not the first time that customers are being notified about a potential wind-down. In May, customers of the program were informed that they will no longer be able to access new loans.
Coinbase Prioritize Product Offering
A spokesperson for the Borrow program claimed that the decision to shut down the program was inspired by an assessment of Coinbase’s selection of public-facing products. From the spokesperson’s comment, it seems the Borrow program which was launched in November 2021 had become less popular amongst customers.
Markedly, the new development only applies to Coinbase retail customers and not Prime or its institutional clients.
“We have notified impacted loan holders and are taking extra measures to ensure a smooth transition for them, including providing a four-month loan repayment period and access to prioritized customer support through Coinbase One,” per a statement by Coinbase.
Coinbase Faces Regulatory Scrutiny With SEC
This decision to fully sunset the Coinbase Borrow program comes amid several regulatory recruiting from United States authorities.
Coinbase has been under the full glare of the Securities and Exchange Commission (SEC) in the U.S. and has been making an effort to take its business elsewhere. Last month, the digital asset service provider was sued alongside Binance for operating an unregistered exchange.
Also, the lack of regulatory clarity in the U.S. forced Coinbase to file a lawsuit against SEC in April. Like many other crypto exchanges, Coinbase believes that the SEC has opposing views about the regulation of digital assets.