Coinbase gives loan holders a four-month window to repay loans as it winds down Borrow serviceCoinbase announced the gradual wind-down of its lending service, Coinbase Borrow, in May. In a new development, the platform notified its users on Thursday that they have until November 20, 2023, to repay any outstanding loan balances. Failure to do so will result in default, leading Coinbase to sell its Bitcoin collateral to settle the loans.
Coinbase Borrow was a service that allowed customers to secure fiat loans up to $1 million, leveraging up to 40% of their Bitcoin holdings, with an annual interest rate of 8.7%. However, in May, users were informed about discontinuing new loan applications under the program.
The recent announcement provides further details, specifying that existing loan holders must settle any outstanding loan balances by the given deadline. A Coinbase spokesperson stated that the decision to officially end the program was made “to focus our resources on the products and services that our customers care about most.” The exchange also cited “low adoption” as the reason for the move, but the precise number of users who utilized the program is unclear.
Coinbase takes extra measures to ensure smooth transition
Coinbase is taking extra measures to ensure a smooth transition for its customers. They have provided customers with a four-month repayment period and access to prioritized customer service through Coinbase One. They are also waiving the typical 2% liquidation fee if customers choose to use their BTC collateral to repay the loan or take no action, and Coinbase sells the BTC for them.
If customers do not repay their loan by the due date, Coinbase will sell their BTC collateral to repay the outstanding loan. The liquidations will take place over five days to minimize slippage of any BTC sell orders by spreading them out over time. Customers will receive an email notifying them of all liquidations.
Coinbase offers all impacted customers four months of free membership to Coinbase One, including prioritized customer support. Coinbase One membership also includes perks such as zero trading fees, boosted staking rewards, and more. After the free months expire, the membership will renew at $29.99 per month. Customers can cancel the membership before the four free months end to avoid being charged.
Customers will be able to access their loan history and the Borrow dashboard until May 1, 2024, as per an email sent to users. The decision to wind down Coinbase Borrow comes amidst increased scrutiny of Coinbase’s services.
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