Prestigious crypto exchange Coinbase said May 10 will be the last day for customers to take out new loans through Coinbase Borrow, which is nearing closure.
Full details below.
Summary
Why is the exchange shutting down Coinbase Borrow?
As anticipated above, based on what we are learning, Coinbase-Borrow will not have much longer to live.
In fact, customers of the US-based exchange who used the program received an email on Wednesday informing them that the last day to take out new loans would be May 10.
As a reminder, Coinbase Borrow allowed customers to take out fiat loans of up to $1 million for up to 30% of their Bitcoin holdings, with interest.
As we know, Coinbase recently came under further regulatory scrutiny following the collapse of the FTX cryptocurrency exchange, and is facing an enforcement action from the U.S. Securities and Exchange Commission (SEC) for alleged securities violations.
However, the closure of Coinbase Borrow appears to be unrelated to any enforcement action, at least for now.
In fact, based on reports, it appears that the closure of Coinbase Borrow has nothing to do with the exchange’s pending or past problems with the SEC.
Specifically, a spokesperson for the exchange attributed the decision to close Coinbase Borrow to reduced demand, stating the following:
“We regularly evaluate our products to make sure we prioritize the offerings our customers value the most. Starting May 10, we will stop issuing new loans through Coinbase Borrow. There is no impact on customers’ outstanding loans and no action is currently required from them.”
SEC Enforcement Action Against Coinbase
As expected, cryptocurrency exchange Coinbase may soon face an enforcement action related to its listing of potentially unregistered securities.
Specifically, Coinbase revealed that the SEC has alleged that the U.S.-based company may have violated securities laws in the operation of its exchange and staking services.
The regulator served with what is known as a “Wells Notice,” which informs the company that the agency is planning future action that could include a cease-and-desist order or bar, without specifying exactly what activity it found to be in violation.
Paul Grewal, Coinbase’s chief legal officer, said:
“If necessary, we welcome legal process to provide the clarity we advocated and to demonstrate that the SEC simply has not been fair or reasonable when it comes to its engagement on digital assets. Until then, it’s business as usual.”
In addition, in a filing with the SEC, citing its discussions with agency staff, said:
“The company believes these potential enforcement actions would target aspects of the company’s spot market, Coinbase Earn staking service, Coinbase Prime, and Coinbase Wallet.”
In any case, keep in mind that the SEC’s warning is preliminary and such warnings do not always result in enforcement actions. As a result, the outcome of the SEC’s investigation of Coinbase appears to be uncertain.
Could the exchange put XRP back on sale?
The recent meeting between Coinbase and Ripple has caused quite a stir throughout the cryptocurrency industry. Indeed, as both companies continue to clash with the SEC over regulatory clarity, speculation has been rife that may be considering putting XRP back on sale.
Coinbase’s chief legal officer, Paul Grewal, took to social media to express his satisfaction with the meeting and the need for more meetings in the future. In response, Ripple’s Chief Legal Officer Stuart Alderoty expressed his appreciation for the opportunity to speak with Coinbase’s legal team.
Meanwhile, as we know, the battle with the SEC continues on both fronts. Indeed, Ripple Labs and its executives are also awaiting summary judgement in their long-running litigation with the SEC.
