The reason behind the exchange’s decision is unclear. According to people familiar with the matter, the service shutdown is not related to an investigation by the SEC alleging that Coinbase was offering and trading unregistered securities, thereby violating federal securities laws.
crypto exchange coinbase inc (NASDAQ: COIN) has announced its decision to stop issuing loans through its Coinbase lending service where bitcoin (B T c) serving as collateral. Customers will not be able to use this facility from May 10. However, existing outstanding loans will not be affected.
coinbase spokesperson commented,
“We regularly evaluate our products to ensure that we are prioritizing the offerings that our customers care about most. Effective May 10th, we will stop issuing new loans through Coinbase Borrow. There has been no impact on customers’ outstanding loans, and no action is required from them at this time. You will continue to have access to your loan history and complete lending dashboard.
there was a program called coinbase boro launched Back in November 2021. It allowed users of the Coinbase platform to borrow up to $1 million with 30% of their bitcoin holdings serving as the only collateral required. The facility came with an annual percentage rate (APR) of 8%, and the loan was structured in such a way that users only needed to pay interest payable per month at a minimum rate of $10. Furthermore, the idea was to prevent users from liquidating their bitcoin holdings whenever there was an emergency need. Instead of liquidation, users can access the loan facility and its very low interest rate, which can be accessed through the payment app PayPal Holdings Inc (NASDAQ: PYPL), or via bank transfer via ACH.
Why is Coinbase Seizing Borrow Program?
The reason behind the exchange’s decision is unclear. According to people familiar with the matter, the shutdown of the service is not connected to the investigation by the US Securities and Exchange Commission (seconds) which has alleged that Coinbase was offering and trading unregistered securities, thereby violating federal securities laws.
Some of the events kicking off the Crypto Winter that started shortly after the launch of Coinbase Boro. As the crypto market cooled down, fewer and fewer users began to take advantage of the product, leading to the decision to end support for it. The total number of people who have actually used the benefits offered by the program is unclear.
Now, Coinbase is expecting enforcement action from the SEC. In March, the US regulatory agency Issued A Wells notice to Coinbase warning of possible securities charges. In the notice, the SEC said it has identified possible violations of US securities laws and intends to enforce action against the exchange. Coinbase’s response was firm, with its chief legal officer Paul Grewal saying that any enforcement action against the exchange would pose a major “problematic risk” to the SEC and would “fail on the merits” of the regulator.
Currently, the SEC is looking into the exchange’s spot market, staking service, Coinbase Prime, and Coinbase Wallet.
Daria is a crypto enthusiast who strongly believes in the future of blockchain. Being a hospitality professional, she is interested in finding ways in which blockchain can transform various industries and bring our lives to a different level.
Bitcoin Crypto Related Post