Coinbase Bows Out of Borrow Program

Cryptocurrency exchange Coinbase will soon stop allowing users to borrow cash using bitcoin as collateral. 

The US-based exchange’s Borrow program allowed customers to borrow fiat loans up to $1 million against as much as 40% of their bitcoin holdings with an annual interest rate of 8.7% interest, in certain US states. 

But on May 3, the exchange told customers in an e-mail that starting May 10, they would no longer be able to access the Borrow feature.

“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,” the company said, according to a screenshot of the email posted to Twitter. 

The exact number of eligible users who utilized the Borrow program isn’t clear. Blockworks reached out to Coinbase for comment. 

The move comes after the Securities and Exchange Commission warned Coinbase that it is at risk of an enforcement action for allegedly offering and selling unregistered securities — a big no-no in the eyes of federal law — although the definition of a security when it comes to digital assets is an ongoing debate in Washington policy circles.

And it’s not just one or two of Coinbase’s services that are in trouble. The SEC is eyeing the exchange’s spot market, staking service, Coinbase Prime and Coinbase Wallet. 

Analysts have weighed in on the stock’s potential for growth, and opinions on its prospects are divided. 

Earlier this week, Citigroup analyst Peter Christiansen slashed his price target for Coinbase shares from $80 to $65 and downgraded the stock from “buy” to “hold.” But Morningstar analyst Michael Miller took a more optimistic view, arguing Coinbase is undervalued and that his fair value estimate for its shares stands at $80.

Coinbase has not indicated that the closure of Coinbase Borrow has anything to do with the potential enforcement action.

Separately this week, the exchange launched an international derivatives exchange for institutional players outside the US. The new exchange is listing bitcoin and ether perpetual futures this week, and settling all trades in USDC without the need for any fiat on-ramps.

Coinbase will report earnings results on May 4 after the market close. The exchange’s shares last traded around $48 in Wednesday’s pre-market, and are up 32.8% in the year-to-date period, TradingView data showed.

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: Unpacking crypto and the markets.
• Empire: Crypto news and analysis to start your day.
• Forward Guidance: The intersection of crypto, macro and policy.
• 0xResearch: Alpha directly in your inbox.
• Lightspeed: All things Solana.
• The Drop: Apps, games, memes and more.
• Supply Shock: Bitcoin, bitcoin, bitcoin.