The service, which allowed users to borrow up to a million dollars in exchange for BTC collateral, will be shut down shortly.
The largest US crypto exchange announced that it will be deprecating its lending product, Coinbase Borrow, on the 10th of May.
According to a spokesperson for the company, the product no longer garnered enough interest to justify allocating funds for it. Loans taken out using the program will remain active until their conclusion.
Decision Not Linked to Regulatory Troubles
The decision to cease Coinbase’s Borrow program is not linked to any regulatory action, pending or enforced, according to the company. However, it may be linked to a review of Coinbase’s financial model, whose stock value has contracted by nearly 30% over the past 3 weeks.
The crypto platform will report its quarterly earnings on the 4th of May, in the middle of a back-and-forth with regulators like the SEC, who seem to have an ever-worsening outlook on the crypto industry as a whole.
No Action Needed From Customers
Current users of the Coinbase Borrow product are not at risk and do not need to take any action to prevent their positions from being closed, according to Bloomberg.
Loans can be taken out up until the 10th of May, after which any new borrowing attempts in exchange for BTC collateral will be rejected by the company. Later, all loan contracts will be carried out to term, after which the product will be completely shuttered indefinitely.
According to the spokesperson, the decision to end the program was motivated by a re-evaluation of the prioritization of products offered to the public by Coinbase. Similar to the case of Coinbase Pro – which was shuttered last summer, with the majority of its products folded into the main platform – the team deemed the existence of Coinbase Borrow superfluous.
“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.”
The service has had a relatively short support period. It launched in November of 2021 as a way to support users who needed cash quickly without having to deal with the tax issues that could arise from selling Bitcoin directly. However, the crypto winter set in shortly after the launch. As crypto markets cooled down, fewer and fewer users began to take advantage of the product, leading to the decision to end support for it.
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