Coinbase to Cease Issuing New Bitcoin-Backed Loans
Coinbase, a leading cryptocurrency exchange, has announced the discontinuation of new loan issuances through its Borrow service, without citing any specific reasons for the decision.
Unaffected Existing Loans
The announcement came via an email sent to Coinbase Borrow customers on May 3, which was subsequently shared on Twitter. The email assured customers that there would be no impact on outstanding loans, and no further action was required on their part.
A Possible Connection to Regulatory Issues
The move to halt new loan issuances comes amidst a regulatory scuffle between Coinbase and the U.S. Securities and Exchange Commission (SEC). The SEC sent a Wells notice to the exchange in March, citing possible violations of securities laws.
Analysts’ Opinions Ahead of Q1 Results
Coinbase’s announcement comes just before its first quarter results, which are expected to be released on May 4. Investment analysts from Citi downgraded Coinbase shares from “buy” to “neutral” ahead of the earnings announcement. Mizuho analysts maintained their “underperform” rating on Coinbase, stating that the exchange’s fundamentals remain weak.
Coinbase International Exchange Launch
In light of the apparent crackdown on crypto firms in the U.S., Coinbase recently decided to take its exchange global by launching the Coinbase International Exchange derivatives trading platform on May 2.
In Summary
Coinbase’s decision to cease issuing new Bitcoin-backed loans through its Borrow service marks a significant change for the crypto exchange. While existing loans remain unaffected, the discontinuation of new loans may be connected to ongoing regulatory issues with the SEC. As Coinbase prepares to release its Q1 results and has recently launched its International Exchange, it remains to be seen how these developments will impact the company’s performance and future offerings in the rapidly evolving crypto landscape.
