Loan holders will have to clear their outstanding loan balances until November 20, 2023.
An unnamed source has announced that Coinbase will end its lending program, Coinbase Borrow, over the next few months.
Coinbase Borrow, a program that allowed customers to receive fiat loans of up to $1 million, began in November 2021. According to its website, users could borrow as much as 40% of their Bitcoin holdings at an 8.7% annual interest rate.
However, in May, Coinbase announced that it would no longer allow new loans to be taken. It noted that it took the decision after re-evaluating the product’s prospects. At the same time, it promised that existing loan customers would not be affected.
Coinbase to Wind Down Its Lending Service in November
With the current development, loan holders will have until November 20, 2023, to clear their outstanding loan balances. It is unclear how many users this will affect
According to the source, they “have notified impacted loan holders and are taking extra measures to ensure a smooth transition for them”. This measure includes priority access to customer support through Coinbase One and a four-month loan repayment period.
While Coinbase remains unclear as to its reason, there are indications the shutdown of the product may have been due to low demand. Others suggest that the exchange is simply doubling down on its essentials after attracting scrutiny from the SEC. Recall that the regulator warned Coinbase it could face enforcement action for supposedly offering unregistered securities. Possible targets of the enforcement action are the exchange’s spot wallet service, Coinbase Prime, and its Coinbase wallet.
Exchange Advocates Update of Financial System
Meanwhile, the crypto exchange has issued a call for a clearer regulatory framework for crypto in the United States. The company noted that 1 in 5 Americans held crypto while the industry was attracting more interest from institutional investors. A lack of regulation, it said, was pushing Americans towards “unregulated” foreign exchanges.
Coinbase noted that blockchain and crypto had the potential to revolutionize the financial system but the US must stop its regulation-by-enforcement approach. “It’s time to allow for a faster, more affordable, and more transparent system to exist – that’s the promise of crypto,” it said.