Cryptocurrency lending firm CoinLoan has declared it will reduce its $5,000 daily withdrawal cap from $500,000. The new $5,000 daily withdrawal cap for consumers is a 99% reduction from its prior cap. According to the company, while it remains “unaffected” by recent market turbulence, a hike in money withdrawals is the reason behind this decision.
This, it added, is a “precaution” to ensure a balanced flow of cash, while also preventing “liquidity-related disturbances.” Although it recognized that stopping all withdrawals would have been “more convenient” from a commercial standpoint, it asserted that the present level of liquidity is adequate to meet all client needs.
Not affected by Crypto Winter?
According to the lender,
“Crypto lending is the backbone of our business. The interest we pay on the Interest Accounts is yielded by issuing overcollateralized loans to other platform users. Hence, in some instances, the estimated date of a complete withdrawal of assets from the Interest Accounts comes before, not after, loan closure. With this in mind, CoinLoan is taking pre-emptive steps to ensure smooth operation in the future.”
One of the original “CeFi” platforms in the cryptocurrency sector, CoinLoan was founded in 2017. CeFi refers to a centralized business that employs DeFi technologies for high yield. The company now offers an annual percentage yield (APY) on stablecoins and fiat currency (such as the British Pound and the Euro) – 12.3% – And as high as 7.2% on Bitcoin and a dozen other notable cryptocurrencies.
Just another brick in the wall?
CoinLoan has recently joined a growing list of cryptocurrency companies that have restricted or frozen customer withdrawals. The cryptocurrency industry has been shaken by several failures, including those of the supposed stablecoin TerraUSD.
The latest sign of stress came from Vauld after it announced on Monday that it will cease withdrawals and trading while seeking new investors.
On 12 June, Celsius stopped accepting withdrawals, exchanges, and transfers. It is currently exploring ways to become solvent again. Today, the company announced that it is “taking significant steps to maintain, defend, and explore possibilities” about its assets.