The borrowing service offered by the cryptocurrency exchange Coinbase, Coinbase Borrow, has just stated that it would no longer be accepting new loan applications.
The cryptocurrency exchange, however, reassured its customers that there would be no impact on their current loan amounts. This information is released at a time when Coinbase and the SEC in the US are still in conflict. The crypto trading platform and the securities regulators have filed lawsuits.
The Borrow program of the US-based exchange permitted users in several US jurisdictions to borrow fiat loans up to $1 million against as much as 40% of their bitcoin holdings at an annual interest rate of 8.7%.
The exchange informed clients via email on May 3 that they would no longer be able to use the Borrow option as of May 10.
“There is no impact on your outstanding loans and there is no action required at this time. You will continue to have access to your loan history and the full Borrow dashboard,” according to a snapshot of the email that was shared on Twitter, the corporation claimed.
The action was taken after the Securities and Exchange Commission warned Coinbase that it could face enforcement action for allegedly offering and selling unregistered securities, which is against the law according to federal regulations, even though there is an ongoing discussion about what constitutes security when it comes to digital assets in Washington policy circles.
And more than a few of Coinbase’s services are having issues. The exchange’s spot market, staking service, Coinbase Prime, and Coinbase Wallet are all under the SEC’s scrutiny.
The discontinuation of Coinbase Borrow has not been connected with any enforcement action, according to Coinbase.
A different international derivatives market for institutional participants outside the US was opened by the exchange this week. This week, the new exchange will publish perpetual futures contracts for Bitcoin and ether. All trades will be settled in USDC without the requirement for fiat on-ramps.