In a recent announcement, Coinbase gave a statement that it will shut down its Coinbase Borrow program in the next few months. Coinbase Borrow, a program introduced in November 2021, allowed users in certain US states to receive fiat loans up to $1 million.
According to its website, users could borrow as much as 40% of their Bitcoin holdings at an 8.7% annual interest rate.
In May 2023, Coinbase announced that it would no longer allow Coinbase Borrow customers to take out new loans as a part of a regular process of re-evaluating its products.
According to the sources, “We have decided to fully close Coinbase Borrow for retail users effective November 20, 2023, to focus our resources on the products and services that our customers care about most.”
Adding to that, a Coinbase spokesperson said, “We have notified impacted loan holders and are taking extra measures to ensure a smooth transition for them, including providing a four-month loan repayment period and access to prioritized customer support through Coinbase One.”
The exchange also stated “low adoption” as the reason for the move.
Customers can access their loan history and borrow dashboard until May 1, 2024, as per an email sent to users. Loan holders who fail to repay their outstanding balances by Nov 20 will be considered in default, leading Coinbase to sell their bitcoin collateral to settle the loans.
The decision to close the Borrow program is because of a legal lawsuit filed by SEC against Coinbase earlier this month.
In early June, SEC filed a lawsuit against Coinbase, accusing it of violating US securities regulations regarding the trading and staking activities of some cryptocurrencies, which were declared securities by the SEC.
Also Read: SEC: Going Public Doesn’t Equal Blessing for Coinbase
