Crypto Exchange Coinbase to Stop New Loans Via Borrow Service

Yueqi Yang, Bloomberg News

A branded notebook at the Coinbase Global Inc. event in Bengaluru, India, on Thursday, April 7, 2022. Coinbase, the U.S. cryptocurrency exchange operator, plans to more than triple its number of employees in India this year to around 1,000, according to Armstrong. Photographer: Samyukta Lakshmi/Bloomberg , Bloomberg

(Bloomberg) -- Coinbase Global Inc., the largest US crypto exchange, will stop issuing new loans through a service that lets people borrow against Bitcoin.

New loans via the service, Coinbase Borrow, will cease effective May 10, the company said in a statement late Wednesday. There is no impact on customers’ outstanding loans, the firm added.

“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most,” a spokesperson said in the statement.

Coinbase Borrow provides loans of as much as $1 million against Bitcoin as collateral but only in certain US states. Customers can borrow up to 40% of the value of Bitcoin in their accounts, at an annual interest rate of 8.7%, the exchange’s website shows. Chief Executive Officer Brian Armstrong had described the borrow program as an example of expanding the crypto economy.

The company is due to report quarterly results on May 4 amid ongoing regulatory uncertainty surrounding the exchange. It received a Wells Notice from the US Securities and Exchange Commission in March, which signals the agency’s plan to sue the firm over several business lines.

(Updates with more from the statement in the third paragraph.)