The U.S.-based crypto exchange Coinbase has announced that it would gradually halt the operations of its lending product, Coinbase Borrow, as of May 10.
The firm has pointed out that the customers will not be able to take out new loans through the service after the deadline.
- Existing clients' outstanding loans will continue to stay active after May 10, and the company stated that customers do not need to take further action.
- When all the terms of active loan contracts end, the product will permanently be shuttered.
- A Coinbase spokesperson said they are prioritizing the offerings seeing interest most while explaining the decision.
- The firm also underlined that the decision has nothing to do with any regulatory action, enforcement, or legal process.
- The service allowed customers to post their Bitcoin (BTC) funds as collateral to receive cash loans of up to $1M in certain U.S. states.
- Users were able to borrow up to 40% of their BTC balances at an 8.7% annual interest rate.
- Coinbase launched its lending product in November 2021, and at the time, CEO Brian Armstrong defined the service as an example of expanding the crypto economy.
- Coinbase is currently in a legal battle in the U.S. with the Securities and Exchange Commission (SEC).
- The SEC claims that Coinbase could violate the securities laws through its exchange and staking services, while the popular crypto exchange complains about the lack of regulatory clarity that it holds the agency responsible for.
- Armstrong recently said the company could move its headquarters outside the U.S. if the regulatory environment does not change in the country.