Coinbase to fully cancel Bitcoin borrowing program for retail customers

Coinbase will fully cancel its Bitcoin borrowing program for retail customers. Faced with regulatory uncertainties in the United States and entangled in a lawsuit with the SEC, Coinbase is actively expanding overseas while reducing product services in the U.S. to maintain a low profile.

No Credit Score Needed! Borrow Money with Bitcoin

The Borrow service launched by the long-standing U.S. exchange Coinbase in August 2020 allows users to borrow cash by collateralizing Bitcoin. Users can borrow up to 30% of their total Bitcoin holdings, with a maximum limit of $20,000, at an interest rate of 8%, for a maximum period of one year. According to reports at that time, the official statement was:

We have heard from our users that some people need cash to pay for home renovations, car repairs, and other expenses, but they do not want to sell their cryptocurrency holdings too early. They also shy away from high-interest loans with traditional financial institutions that have annual interest rates of over 20%. Now, through Bitcoin-based loan services, users can quickly borrow cash from their Coinbase accounts without the need for lengthy applications or credit scores. Simply register, apply, and cash will be credited to the account within two to three days.

Coinbase to Fully Settle Retail Customer Loans

In May of this year, Coinbase informed customers that they would no longer be able to obtain new loans through Borrow. Now, The Block has reported that borrowers must settle all outstanding balances by November 20, or the cryptocurrency exchange will sell their Bitcoin collateral to repay the loan.

According to The Block, citing a Coinbase spokesperson, Coinbase aims to focus its resources on the products and services that customers care about the most.

We have notified affected borrowers and are taking additional measures, including providing a four-month loan repayment period and offering priority support through Coinbase One to ensure a smooth transition for them during this period.

However, this does not apply to their Prime or institutional clients.

Coinbase Actively Expanding Overseas, Keeping Low Profile in the U.S.?

In late March, the U.S. cryptocurrency exchange Coinbase received a Wells notice from the U.S. Securities and Exchange Commission (SEC), warning that the exchange may have violated U.S. securities laws. In June, the SEC took further action, suing Binance and Coinbase consecutively, specifically mentioning Coinbase for listing multiple unregistered securities.

Facing regulatory uncertainties in the U.S. and legal troubles with the SEC, Coinbase has been actively expanding overseas, with the offshore derivatives exchange launched in Bermuda in June seemingly performing well. In contrast, products within the U.S. seem to be shrinking, and even founder Brian Armstrong has been less vocal recently. Could it be that they are waiting for further clarity on U.S. regulatory matters?