After coming under SEC inspection, top Bitcoin (BTC) exchange Coinbase is slowly closing down its popular lending business, Coinbase Borrow. Previously, users could borrow up to $1,000,000 in USD at an annual interest rate of 8.7% by securing a loan against 40% of their bitcoin holdings, media report said.
The exchange first told its customers in May that it would no longer accept new loan applications; current loan holders have now been asked to pay off their sums by November 20. The move is part of Coinbase’s strategy to reorganize the company around its customers.
A Coinbase representative said “low adoption” was a factor, but the company hasn’t stated how many people are really using the program. The exchange is providing a four-month grace period for loan repayment and priority service via Coinbase One to help affected loan holders through the changeover.
If loan sums are not paid in full by the due date, Coinbase will sell the digital currency to cover the debt. Up until May 1st, 2024, customers may still see their loan records and use the Borrow dashboard.
Although Coinbase is under investigation by the SEC for acting as an unregistered securities exchange and failing to register its cryptoasset staking-as-a-service platform, the closure of Coinbase Borrow has not been directly tied to these events.
Concerns have been raised regarding the viability of Bitcoin lending services in light of Coinbase’s move, which represents a major change in the company’s operations and approach.
