Coinbase has begun closing Borrow, which allowed customers to borrow using bitcoin as collateral.
The firm said in a Thursday (July 20) message on its website that it has begun the process of closing Borrow, that customers can no longer take out new lines of credit against their crypto and that existing Borrow customers have until Nov. 20 to pay back their existing loans.
“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most,” Coinbase said in the message. “After much consideration, we have made the decision to wind down Coinbase Borrow.”
Customers who have a loan that is due after Nov. 20 will have until that date to repay their outstanding balance or, after that date, the company will close the accounts by selling enough BTC collateral to pay off the unpaid balance and waive the 2% liquidation fee, according to the message. Those who have a loan due before Nov. 20 can continue to make payments until they have completed the loan schedule.
“We recognize the inconvenience, which is why we’re taking extra measures to ensure a smooth transition for you,” Coinbase said in the message. “We have provided customers with a 4 month repayment period along with access to prioritized customer service through Coinbase One.”
Those who are not already members of Coinbase One will get free membership for four months, according to the message. This subscription membership program also provides zero trading fees, boosted staking rewards and other perks.
It was reported in May that Coinbase would stop issuing new loans via Borrow on May 10. CoinDesk reported May 8, citing an unnamed source, that the closure of the program had nothing to do with Coinbase’s troubles with the Securities and Exchange Commission (SEC).
Coinbase Borrow was launched in November 2021 and allowed customers to borrow fiat loans of up to $1 million against as much as 30% of their bitcoin holdings, with interest, thereby getting loans quickly without incurring the taxable gain or loss they would face if they sold their bitcoin, according to the report.