According to recent reports, the largest US cryptocurrency exchange, Coinbase, announced the termination of its Borrow program.
Coinbase to Cease New Crypto Loans
The exchange clarified that it is independent of any ongoing or enforced regulatory action. However, it could be related to a review of Coinbase’s monetary model, as the company’s stock price has dropped by nearly 30% in the last three weeks.
According to Bloomberg, current Coinbase Borrow customers are not considered to be at risk and are not obligated to act on measures to prevent their holdings from being closed.
Loans Can be Obtained Prior to May 10
Up to May 10th, loans may be obtained in return for BTC collateral; thereafter, the firm will reject any further borrowing requests. Following the completion of all loan contracts, the service will cease operations and entirely shut down for ever.
According to the spokesman, the decision to stop the programme was inspired by an assessment of Coinbase’s selection of public-facing products. Similarly to Coinbase Pro, which closed down last summer and the majority of the company’s offerings were incorporated into the main platform.
The representative said:
“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most. Effective May 10, we will stop issuing new loans through Coinbase Borrow.”
Decline in the Popularity of Crypto Lending
Notably, the Borrow service was started in November 2021 to assist consumers who needed cash urgently but did not want to deal with the tax complications that may occur from trading Bitcoin. However, the crypto winter arrived soon after the initial public offering.
As the crypto markets cooled, a decreasing number of consumers began to use the product, prompting the decision to discontinue support for it.
Coinbase vs. United States SEC
The exchange is frequently facing difficulties as authorities in the United States like the SEC, which appears to have a negative perspective on the cryptocurrency business as a whole, are chasing down the company.
According to Coinbase, the SEC has had contradictory opinions on the regulation of digital assets over the years.