Coinbase To Stop New Loans Via Borrow Service

Key Points:

• Coinbase will no longer issue new loans using a program that allows users to borrow using Bitcoin as collateral.
• New loans through the service will be discontinued on May 10, the company announced late Wednesday.
• Customers’ outstanding debts will be unaffected, according to the company.

Coinbase, the biggest cryptocurrency exchange in the United States, will cease making new loans via a program that allows customers to borrow using Bitcoin as collateral.

Clients of the US-based exchange who utilized the scheme, which enabled them to borrow fiat loans of up to $1 million against up to 30% of their Bitcoin holdings with interest, got an email on Wednesday alerting them that the final day to take out fresh loans was May 10. Customers’ outstanding debts will be unaffected, according to the company.

Coinbase Borrow only makes loans in select US states. The firm is scheduled to announce quarterly earnings on May 4th, despite the exchange’s persistent regulatory uncertainties.

According to the CoinDesk report, the shutdown of Coinbase Borrow seems to be unrelated to any enforcement action for the time being.

Following the collapse of crypto exchange FTX, Coinbase has come under increased scrutiny from regulators and is expecting enforcement action from the US Securities and Exchange Commission (SEC) for alleged securities violations.

Coinbase replies to the SEC’s Wells notice, noting that it works within legal boundaries and encourages genuine dialogue about a viable route ahead for the crypto sector.

Coinbase’s CEO, Brian Armstrong, underlined that the company is dedicated to operating within the regulatory framework and properly evaluates its offers. It does not list securities and rejects “about 90%” of the assets it examines.

Despite the regulatory concerns, the company is still prepared to defend its position in court. However, it believes that this is not necessary and welcomes an actual discussion about a viable path forward for the cryptocurrency industry.

Coinbase is also facing a class-action lawsuit alleging that the company violated Illinois biometric privacy regulations by collecting and storing client fingerprints and facial templates. A user argued that the exchange violated the Biometric Information Privacy Act of Illinois (BIPA).

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Harold

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