Coinbase to Stop Issuing Loans Through Borrow Program

U.S.-based cryptocurrency exchange Coinbase has warned users that starting next week they will no longer be able to receive loans through its Coinbase Borrow program.

The exchange sent emails to its Borrow customers on 3 May — which was shared on Twitter by its recipients — informing them that no more loans will be issued through its Borrow program starting 10 May. While it did not provide a reason for the move, Coinbase noted that this will have no impact on outstanding loans, and that customers were not required to take any action. A Coinbase spokesperson said in a statement:

“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. There is no impact on customers’ outstanding loans, and no action is required from them at this time.”

Announced in August 2020, and publicly launched in November 2021, the service allowed Coinbase users in select U.S. states to borrow up to $1 million in fiat loans from the exchange against as much as 40% of their Bitcoin (BTC) account holdings. The goal of the program — which required no credit check, and charged users 8.7% annual percentage rage — was to allow users to receive fiat loans quickly without the need to sell their BTC, which could incur a taxable gain or loss.

The closure of the Borrow program comes amid a regulatory scuffle between the exchange and the Securities and Exchange Commission (SEC), which back in March sent Coinbase a Wells notice warning it of a potential enforcement action. The exchange, in turn, filed a lawsuit against the SEC last month in order to receive a yes or no response to a rulemaking petition — asking for clearer regulatory guidelines for the crypto industry, and answer to 50 specific questions regarding digital assets — it had filed back in July 2022.

The ongoing regulatory tensions were a part of the reason why Coinbase expanded outside of the U.S. on Tuesday with the launch of the Coinbase International Exchange (CIE). Based in Bermuda, CIE allows institutional users to trade BTC and ETH perpetual futures with a 5x leverage.