3 - 4 minute read
Crypto exchange giant Coinbase has announced that it will halt all new loans through its Borrow service from May 10. Coinbase Borrow is a product that allows certain United States customers to post crypto as collateral to receive a cash loan. The service enables users to borrow from the exchange against up to 40% of their Bitcoin holdings, with a $1 million limit, and requires no credit check. Despite being a popular service, Coinbase has not publicly addressed why it closed Borrow. A Coinbase spokesperson told Cointelegraph, “We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most.”
It is worth noting that Coinbase’s decision to halt its Borrow service comes amid a regulatory scuffle between it and the Securities and Exchange Commission (SEC). The regulatory body sent the exchange a Wells notice in March. In response, Coinbase claimed that it was in relation to “possible violations of securities laws.”
Coinbase has reportedly not given any reason for the suspension of its Borrow service, and it is unclear whether it is related to the regulatory scuffle with the SEC. However, it is worth noting that the email to users proceeded its first-quarter results announcement, which is set to be unveiled on May 4.
Investment analysts from Citi downgraded Coinbase shares from “buy” to “neutral” ahead of the exchange’s Q1 earnings. Meanwhile, analysts from Mizuho reportedly maintained its “underperform” rating on Coinbase, stating that its “fundamentals remain weak” citing lower average daily trading volumes.
Coinbase’s recent regulatory issues and the suspension of its Borrow service could have implications for traders. It is important to note that while Coinbase has not publicly addressed why it closed Borrow, it may be due to regulatory concerns, which could impact the exchange’s overall operations and financial success. As such, traders should monitor the situation closely and consider any potential risks.
The Bottom Line
Coinbase’s suspension of its Borrow service comes amid regulatory issues and ahead of the exchange’s Q1 earnings announcement. With analysts downgrading its shares and citing weak fundamentals, traders should monitor the situation closely and consider any potential risks.
