Cryptocurrency exchange Coinbase is stopping new loans through its lending service, which allows certain US customers to use cryptocurrencies as collateral for cash loans.
In an email sent to Coinbase Borrow customers on May 3, shared by recipients on Twitter, the exchange said without providing any reason that starting May 10, customers will It will not be possible to apply for new loans using Coinbase Borrow.
It added that there was no impact on outstanding loans and no further action was required by customers. "We regularly evaluate our products to ensure we prioritize what our customers care about most."
The service allows users to borrow up to 40% of their bitcoins from the exchange, Shareholding, limited to $1 million. It requires no credit check, and users pay an annual interest rate of nearly 9% for the service.
The announcement comes against the backdrop of a regulatory scuffle between Coinbase and the US Securities and Exchange Commission, which sent the Wells notice to the exchange in March, saying it was related to "possible violations of securities laws." The email to users was al so released ahead of the release of first-quarter results, which are expected on May 4.
Investment analysts at Citi downgraded Coinbase stock to "neutral" from "buy" ahead of the exchange's first-quarter earnings report. Mizuho analysts also reportedly maintained their “underperform” rating on Coinbase, saying its “fundamentals remain weak,” citing low average daily Trading volumes. Earlier this week, amid an apparent US crackdown on cryptocurrency firms, Coinbase decided to take its exchange global, launching the Coinbase International Exchange derivatives trading platform on May 2.
