Coinbase, one of the largest cryptocurrency exchanges in the United States, has announced that it is closing its Coinbase Borrow program. The program, which allowed customers to borrow fiat loans against their bitcoin holdings, will stop accepting new loans from May 10.
The Coinbase Borrow program was launched in November 2021 as a way for customers to obtain fiat loans quickly without the need to sell their bitcoin holdings, which could result in a taxable gain or loss. The program allowed customers to borrow up to $1 million against as much as 30% of their bitcoin holdings, with interest.
In an email sent to customers of the exchange who used the program, Coinbase announced that the decision to close Coinbase Borrow was due to reduced demand. A spokesperson for the exchange confirmed that there would be no impact on customers’ outstanding loans, and that no action was required from them at this time.
The closure of Coinbase Borrow comes at a time when the exchange is under extra scrutiny from regulators. The collapse of crypto exchange FTX has put Coinbase under the spotlight, and the exchange is expecting enforcement action from the U.S. Securities and Exchange Commission (SEC) over alleged securities violations. However, the closure of Coinbase Borrow seems to be unconnected to any enforcement action, according to a person familiar with the matter who spoke to CoinDesk.
Coinbase has been one of the major players in the cryptocurrency industry, with a valuation of $85 billion in its recent public listing. However, the closure of Coinbase Borrow suggests that the exchange is re-evaluating its product offerings and focusing on the services that customers care about most.
The cryptocurrency industry has been subject to increased scrutiny from regulators in recent months, with concerns over the potential for fraud, money laundering, and other criminal activities. The closure of Coinbase Borrow may be seen as a sign that the industry is taking steps to address these concerns and ensure that it operates within the bounds of the law.
In conclusion, the closure of Coinbase Borrow may come as a disappointment to some customers of the exchange, but it appears to be a strategic decision by Coinbase to focus on its core offerings. As the cryptocurrency industry continues to evolve and face increased regulatory scrutiny, it will be interesting to see how exchanges and other companies in the space adapt and innovate to meet the changing needs of their customers.
Read more:
- Coinbase Launches International Exchange For Perpetual Futures Trading
- Coinbase Takes Legal Action To Seek Regulatory Clarity From SEC