The service allows users to borrow up to $1 million with no credit check, provided they post Bitcoin as collateral.
Crypto exchange Coinbase is stopping the issuance of new loans through its Borrow service — a product that allows 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 which was shared by recipients on Twitter, the exchange said — without providing a reason — that from May 10 customers won’t be able to take out new loans with Coinbase Borrow.
It added there would be no impact on outstanding loans and customers did not need to take any further action.
Coinbase has not publicly addressed why it closed 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 allows users to borrow from the exchange against up to 40% of their Bitcoin (BTC) holdings, with a $1 million limit. It requires no credit check and users pay 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 (SEC), which sent the exchange a Wells notice in March, which the exchange said was in relation to “possible violations of securities laws.”
The email to users also proceed 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 exchanges Q1 earnings. Analyts 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 seeming crackdown on crypto firms in the U.S., Coinbase decided to take its exchange global, launching the Coinbase International Exchange (CIE) derivatives trading platform on May 2.