The biggest crypto exchange in the US has announced that it will be discontinuing Coinbase Borrow, its lending product, on May 10th.
The company spokesperson has stated that the product has lost its appeal and hence doesn’t justify allocation of funds anymore. However, the loans taken out with the help of the program will remain active until their completion.
Unrelated to Any Regulatory Issues
According to the company, the decision to discontinue the Coinbase Borrow program has nothing to do with any pending or enforced regulatory action but may be related to the company’s financial model review. The value of the company’s stocks has decreased by almost 30% in the last three weeks.
On May 4th, during an interaction with regulators, including the SEC, who seem to have an unpleasant outlook on the cryptocurrency industry, the crypto platform will report its quarterly earnings.
No Action Required from Customers
As per Bloomberg, existing users of the Coinbase Borrow product are not at risk and do not need to take any action to avoid closing their positions.
Loans can be availed until May 10th, after which any additional borrowing attempts against BTC collateral will be disapproved by the company. Eventually, all loan agreements will be completed, and the product will be shut down indefinitely.
The spokesperson stated that the decision to end the program was motivated by a reevaluation of the prioritization of products offered to the public by Coinbase. Following the example of Coinbase Pro, which was closed last summer, with the majority of its products being merged into the main platform, the team deemed Coinbase Borrow’s existence pointless.
“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most. Effective May 10, we will stop issuing new loans through Coinbase Borrow.”
The service has been on the market for a relatively short period as it was launched in November 2021, aiming to support users who needed cash quickly without having to sell Bitcoin directly, leading to potential tax issues. However, due to the crypto winter, fewer and fewer users began to utilize it, leading to the decision to discontinue the support for it.