- Coinbase ceases borrowing service without reason.
- The exchange has not given a public address on their decision.
- Coinbase is expanding its reach amidst concerns of underperforming.
- Analysts claim the Exchange has seen a plummet in relevance.
- Coinbase International will continue despite the exchange’s tussle with the Securities and Exchange Commission over securities violations.
Coinbase has decided to cease a service that allowed users to borrow up to $1 million with no credit check necessary and instead required them to post Bitcoin as collateral for their loans.
The exchange has decided to withhold the issuance of loans through its borrowing service. This product enabled specific United States customers to post cryptocurrency as collateral in return for cash loans.
Through receipts posted on Twitter, it was gathered that Coinbase sent an email to their Coinbase Borrow customers on May 3, informing them of a decision to stop issuing loans with crypto as collateral and gave no reasons behind their actions. Coinbase added that from May 10, customers would not be able to receive loans through the use of Coinbase Borrow.
However, Coinbase’s decision will not impact outstanding loans and does not require current customers to take further action on the decision.
Users of the service have been sharing a screenshot of the notice from Coinbase all over Twitter, but the exchange has publicly addressed its decision to close its borrowing service. A spokesperson for Coinbase told Cointelegraph that the exchange regularly evaluates its products and services to ensure they prioritize the services that serve its customers better.
Coinbase’s borrow service allows users to borrow from the exchange using 40% of the Bitcoin as collateral, with the limit being capped at $1 million, and they require no credit check, ensuring users pay a 9% annual percentage rate for the borrowing service.
The announcement from Coinbase comes amidst their battle with the Securities and Exchange Commission, after the SEC sent Coinbase a Wells back in March, which was related to a possible violation of securities laws.
Coinbase’s email also comes ahead of their first-quarter reports. Investment analysts from Citi have downgraded Coinbase shares from a buy to a neutral state ahead of the announcement of the exchange’s earnings for Q1.
Analysts from Mizuho have also reportedly maintained that the exchange underperformed while adding that their fundamentals have remained weak due to lower average daily trading volumes.
Conclusion
Amidst all the controversy that is swirling around the exchange, including executives and board members facing lawsuits over alleged insider trading during the listing, Coinbase decided to launch Coinbase’s international exchange derivatives trading platform towards their plans to take the exchange globally.
Coinbase shares saw a significant drop recently, but that has kept the exchange from its expansion plans, even with the shares moving from $72 to $50. The global business will operate in 30 countries, including the inclusion of crypto-friendly Bermuda and Hong Kong.
