Coinbase Puts the Brakes on Borrow Cash Loan Service with Bitcoin Collateral
Cryptocurrency exchange Coinbase has decided to discontinue its Borrow service, which provides cash loans to some US customers who offer their cryptocurrency as collateral.
Coinbase sent an email to its Borrow customers on May 3, announcing that they would no longer be able to apply for new loans through the service starting May 10.
The email did not provide a reason for the decision, but it assured customers that existing loans would not be affected and no further action was required from them.
Coinbase has not provided any public explanation for its decision to shut down its Borrow service. A spokesperson for Coinbase told Cointelegraph that the company regularly assesses its offerings to ensure that it focuses on the services that its customers find most valuable.
The Borrow service enables users to borrow cash from the exchange by using up to 40% of their Bitcoin holdings as collateral, with a limit of $1 million.
It does not require a credit check, but users are charged an annual percentage rate of almost 9% for the service.
The email to users also comes ahead of the company’s first-quarter results announcement, scheduled for May 4.
In the lead-up to this announcement, investment analysts from Citi downgraded Coinbase shares from “buy” to “neutral,” while analysts from Mizuho maintained their “underperform” rating, citing weak fundamentals and lower average daily trading volumes.
Against this backdrop, Coinbase has launched its Coinbase International Exchange (CIE) derivatives trading platform on May 2, seeking to expand its presence globally in response to what appears to be a crackdown on crypto firms in the US.
