Coinbase has decided to discontinue its Borrow service for users in the United States as of May 10 due to ongoing issues with the SEC and a new global push.
On May 10, Coinbase Borrow, the largest US cryptocurrency exchange’s lending offering, will be deprecated.
A firm representative claimed that there was no longer sufficient demand for the product to warrant spending money on it. Loans obtained under the program will be valid until they expire.
According to the business, there are no ongoing or enforced regulatory actions that are related to the decision to stop Coinbase’s Borrow program. It might, however, be connected to a review of Coinbase’s financial model given that its stock price has dropped by almost 30% over the last three weeks.
In the midst of a back-and-forth with regulators like the SEC, who seem to have a negative outlook on the crypto industry overall, the cryptocurrency platform will disclose its quarterly earnings on May 4.
With the launch of Coinbase Borrow in November 2021, residents of specific U.S. states can now borrow up to $1 million with Bitcoin (BTC) as security.
According to the exchange’s website, customers can borrow up to 40% of the value of the Bitcoin in their accounts at an annual interest rate of 8.7%.
The exchange has also stated that Coinbase Borrow’s closure is unrelated to any potential enforcement actions that may be taken after the U.S. Securities and Exchange Commission (SEC) issued a Wells Notice to the exchange in March.
The SEC issues a Wells Notice when it is debating bringing an enforcement action. The notice gives the receiver the chance to address the accusations made by the agency and defend their position on whether or not enforcement action is necessary.
In the case of Coinbase, the Wells Notice also made reference to the Coinbase Wallet as well as various other parts of the exchange’s operations and claimed that the company’s staking products are unregistered securities.
According to Coinbase, which responded to the SEC’s Wells Notice by asserting that it does not sell securities, its Coinbase Wallet product does not meet the requirements of a broker, and it does not advertise securities on its website, the exchange’s staking services have nothing to do with a securities offering.
The San Francisco-based exchange also said last week that it was suing the SEC for not responding to its “petition for rule-making” that was delivered to the agency in July of last year. The lawsuit intends to persuade the organization to reply to Coinbase’s request for more lucid cryptocurrency legislation.
Earlier this week, Coinbase introduced a new global exchange that would first sell perpetual futures for Bitcoin and Ethereum, with deals paid in USD Coin (USDC).
The service has only been in existence for a brief time. In order to assist consumers who required rapid cash without having to deal with potential tax complications from selling Bitcoin directly, it was introduced in November 2021. However, soon after the launch, the crypto winter arrived. The decision to stop supporting the product came about as crypto markets started to calm off and less and fewer consumers started using it.
