We’re all aware of the story between Coinbase and the SEC, and we have the same question in mind. However, it turns out that Coinbase’s decision to end its Bitcoin-backed fiat loan service, known as Coinbase Borrow, is not a direct result of the SEC’s recent action, according to the exchange platform. The end of this service is in fact announced for May 10.
An official statement sent yesterday by email, only to active customers of this Bitcoin-backed loan service. And the deadline for this sudden shutdown to take effect is May 10!
The platform stated:
“Coinbase Borrow update: as of May 10, 2023, customers will no longer be able to take out new loans with Coinbase Borrow. There is no impact on your current loans and no action is required at this time. You will continue to have access to your loan history and the full Borrow service dashboard.”
At the request of the SEC or due to a tightening of regulations in the United States, various companies had to stop some of their crypto products. This is the case, for example, of Kraken on staking, or of Gemini with Earn.
It is in this conflicting context that Coinbase announces the upcoming end of Coinbase Borrow. This financial service, which is only offered in the US, allows borrowing up to 1 million dollars, so fiat currency. As collateral, the borrower placed a part of his Bitcoin.
Coinbase had offered its customers a way to access cash while keeping their Bitcoin using the Coinbase Borrow service.
Unlike similar products offered by other platforms, such as staking or interest-bearing accounts, this fiat loan offering appears to be less problematic for regulators. Regulators have recently reviewed similar products offered by BlockFi and Celsius.