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The service allowed users to borrow up to $1 million with no credit check, provided they posted Bitcoin as collateral.
Crypto exchange Coinbase is stopping the issuance of new loans through its Borrow service, a product that allowed certain United States customers to post crypto as collateral to receive a cash loan.
In an email sent to Coinbase Borrow customers on May 3 that was shared by recipients on Twitter, the exchange said — without providing a reason — that from May 10, customers wouldn’t be able to take out new loans using Coinbase Borrow.
It added that there would be no impact on outstanding loans, and customers did not need to take any further action.
A screenshot of the email sent to Coinbase customers advising that new Borrow loans would end on May 10. Source: Twitter
Coinbase has not publicly addressed why it was closing Borrow. A Coinbase spokesperson told Cointelegraph:
"We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most.”
The service allowed users to borrow from the exchange against up to 40% of their Bitcoin (BTC) holdings, with a $1 million limit. It required no credit check, with users paying a nearly 9% annual percentage rate for the service.
The announcement is in the backdrop of a regulatory scuffle between Coinbase and the Securities and Exchange Commission, which sent the exchange a Wells notice in March that the exchange said was in relation to “possible violations of securities laws.”
Related: Coinbase officers, board members face suit over alleged insider trading during listing
The email to users also precedes its first quarter results announcement, which is expected on May 4.
Investment analysts from Citi downgraded Coinbase shares from “buy” to “neutral” ahead of the exchange’s Q1 earnings. Analysts from Mizuho also reportedly maintained its “underperform” rating on Coinbase, saying its “fundamentals remain weak,” citing lower average daily trading volumes.
Earlier this week, amid an apparent crackdown on crypto firms in the U.S., Coinbase decided to take its exchange global, launching the Coinbase International Exchange derivatives trading platform on May 2.
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