Coinbase Bows Out of Borrow Program

Coinbase end its borrow program amidst SEC concerns, but outstanding loans remain unaffected for customers

article-image

Nadezda Murmakova/Shutterstock, modified by Blockworks

share

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.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

AERODROME TEMPLATE.png

Research

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495M in value locked, doubling Uniswap's Base deployment.

article-image

Also, former Valkyrie CEO lands new leadership role at Canadian investment firm Cypherpunk Holdings

article-image

This week’s biggest funding round saw Jump Trading, JPMorgan contribute to the round

article-image

Plus, a layer-1 for intellectual property is launching and Farcaster users peaked

article-image

Crypto still hasn’t shaken one of its most garish primordial tails — funny stories about fraud

article-image

Plus, publicly traded crypto companies had a pretty eventful news week

article-image

Committee members directed more questions to Christy Goldsmith Romero, who could soon be leading one of the more troubled federal agencies