Customers of the U.S.-based exchange who used the program – which allowed customers to borrow fiat loans up to $1 million against as much as 30% of their bitcoin holdings, with interest – received an email on Wednesday informing them that the last day to take out new loans would be May 10.

Coinbase has been under extra scrutiny from regulators following crypto exchange FTX’s collapse, and is expecting an enforcement action from the U.S. Securities and Exchange Commission (SEC) over alleged securities violations.

However, the closure of Coinbase Borrow seems – at least for now – to be unconnected to any enforcement action. A person familiar with the matter told CoinDesk the closure of Coinbase Borrow had nothing to do with either pending or past troubles with the SEC.

When contacted by CoinDesk, a spokesperson for the exchange attributed the decision to reduced demand.

“We regularly evaluate our products to ensure we’re prioritizing the offerings that our customers care about most,” the spokesperson said. “Effective May 10, we will stop issuing new loans through Coinbase Borrow. There is no impact on customers’ outstanding loans, and no action is required from them at this time.”

Coinbase Borrow launched in November 2021 and was advertised as a way to get fiat loans quickly without needing to sell bitcoin, which could incur a taxable gain or loss.

Coinbase Loan SEC US

Cheyenne Ligon

On the news team at CoinDesk, Cheyenne focuses on crypto regulation and crime. Cheyenne is originally from Houston, Texas. She studied political science at Tulane University in Louisiana. In December 2021, she graduated from CUNY's Craig Newmark Graduate School of Journalism, where she focused on business and economics reporting. She has no significant crypto holdings.

Nikhilesh De

Nikhilesh De is CoinDesk's managing editor for global policy and regulation, covering regulators, lawmakers and institutions. When he's not reporting on digital assets and policy, he can be found admiring Amtrak or building LEGO trains. He owns < $50 in BTC and < $20 in ETH. He was named the Association of Cryptocurrency Journalists and Researchers' Journalist of the Year in 2020.