Coinbase stopped issuing new Bitcoin-backed loans through its Borrow service, which allowed users to borrow up to $1 million with no credit check
The crypto exchange Coinbase informed its customers that starting May 10, 2023, the company terminates its Coinbase Borrow service which allowed US users to receive fiat loans with crypto collateral.
The lending feature enabled people to get up to $1 million in cash without traditional credit checks applied in legacy institutions. Select customers could use up to 40% of their Bitcoin holdings as a backing. The APR paid for the service was about 9%.
The company did not explain the reasons for the service closure. However, it added that it would not impact any outstanding loans, so customers shouldn’t take any further action.
Commenting on the notice, a Coinbase spokesperson explained that the company is “prioritizing the offerings that … customers care about most.” The absence of more details led to public speculations about the profit losses connected to the Borrow service. Perhaps, more information would be revealed during the quarterly Earnings Call scheduled for today.
Many analysts believe that the crypto exchange’s fundamental financials are weak. That opinion reflects in Coinbase’s corporate ratings such as a downgrade from “buy” to “neutral” by Citi investment analysts or an “underperform” rating from Mizuho.
Upon receiving the Wells Notice from the US Securities and Exchange Commission (SEC), the crypto firm started considering relocation while preparing for the lengthy legal battle. Although immediate relocation is unlikely, Coinbase enhanced its efforts to fulfil an international expansion plan called “Go Broad & Go Deep.”