Coinbase is set to stop issuing new loans through its Coinbase Borrow service, which allowed customers to borrow loans of up to $1m against up to 40% of their Bitcoin (BTC) holdings.
Users of the service received an email stating the last day to take out a loan would be May 10 this year, which also stated that there would no impact on any outstanding loans.
Coinbase is facing increasing scrutiny from the US Securities and Exchange Commission (SEC) after it issued the exchange with a Wells notice, tied to aspects of the exchange’s spot market as well as its Earn, Prime and Wallet products.
In return, Coinbase, the largest US cryptocurrency exchange, has taken legal action against the SEC, filing a suit after the exchange asked (in 2022) that the regulator publicly share its answer to a petition on whether it would allow the crypto industry to be regulated using the existing SEC framework – and receiving no response.
According to the exchange, the regulatory issues have nothing to do with the closure of Coinbase Borrow, stating: “We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most.
“Effective May 10, we will stop issuing new loans through Coinbase Borrow. There is no impact on customers’ outstanding loans, and no action is required from them at this time.”
Coinbase is set to report its earnings in the next few days, with analysts expecting it to report a first-quarter net loss.