The Coinbase Borrow lending service closes its doors

A consequence of the regulatory threat exercised by the SEC ? Nosays theexchangewhich announces the end of its loans in fiat with collateral from Bitcoin. Coinbase Borrow will disappear on May 10.

At the request of the SEC or due to a tightening of regulations in the United States, various companies had to stop some of their crypto products. This is the case, for example, of Kraken on staking, or Gemini with Earn.

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It is in this conflicting context that Coinbase announces the upcoming end of Coinbase Borrow. This financial service, which is offered only in the US, allows you to borrow up to 1 million dollars, from the fiat currency so. As collateral, the borrower placed part of his Bitcoin.

A deletion for lack of demand

With Borrowthe American crypto exchange allowed customers to access liquidity without being forced to give up their BTC. As of May 10, Coinbase customers will no longer be able to take out new loans.

Is the decision to withdraw Coinbase Borrow a consequence of the exchange’s dispute with the SEC And a continuation of the Wells notice received? The firm does not specify. According to a source from Coindeskthe end of the loan product would result from a decline in demand.

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Such a fiat loan offer seems to be less problematic for the authorities than staking or interest-bearing accounts such as Earn from Gemini or other comparable products. BlockFi and Celsius were on the radar of regulators before their collapse.

In early 2022, BlockFi was fined $100 million. At issue was its high-yield account. Such products are similar to securities for the SEC and must therefore be registered.

The SEC is hunting disguised investment contracts

SEC Chairman Gary Gensler recently recalled in a video his expansive definition of securities and brushed aside calls for greater legal clarity.

Crypto markets suffer from a lack of compliance with regulation. It’s not a lack of legal clarity,” he said.

And if crypto companies are now being called out, it’s because of their willingness to present their investment contracts as… goldfish.

The law is concerned with what something actually is, not what you call it,” Gensler warned.

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