Coinbase stops lending against Bitcoin amid a crackdown by U.S. authorities.
Leading U.S. cryptocurrency exchange Coinbase will stop issuing new loans secured by Bitcoin through the service Borrow. Exchange customers received an email with this news on May 3. The trading platform reported that the service will stop issuing loans against collateral on May 10. The reasons for this decision are not reported.
The Borrow service was launched in November 2021. Users could borrow up to $1 million at 9% APR with no credit check, as long as bitcoins were blocked as collateral. The change would have no effect on loans and customers already issued. The entire history of loans issued to the client will be available in the user’s personal account.
A Coinbase spokesperson told Cointelegraph that dropping credit services is part of the company’s strategy, “We regularly evaluate our products to make sure we are prioritizing the offerings that matter most to our customers.”
Coinbase’s service changes come amid a fight between the exchange and the U.S. Securities and Exchange Commission (SEC), which issued a Wells notice in March accusing the trading platform of trading in unregistered securities.
Coinbase responded by urging the regulator not to take enforcement action against the company for the sake of the SEC’s own reputation. The fact is that the leading crypto player in the U.S. market was allowed to become a public company and begin trading on Nasdaq in 2021. According to Coinbase, being allowed to quote on Nasdaq implies that the SEC considers the company’s business to be legitimate.
In addition, Coinbase just a couple of days ago announced the launch of an international digital asset futures exchange called Coinbase International Exchange. It is licensed in Bermuda, and the new unit is registered there as well. This could be part of the process of preparing a backup airfield to take business out of the U.S.