Coinbase Updates User Agreement to Access Customers’ Credit History

Coinbase has updated its User Agreement to allow the company, either directly or through third party intermediaries, to collect credit histories from its 1.9 million users.
The new terms in the second paragraph read as follows:
‘You hereby authorize Coinbase to, directly or through third parties, (i) Make inquiries we consider necessary to verify your identity and/or account information and (ii) request and obtain any consumer report, credit report or similar information relating to you and take action we reasonably deem necessary and to take any action we reasonably deem necessary based on the results of such inquiries and reports…’
Meanwhile in the preceding paragraph, Coinbase had informed its users that if they do not agree with these terms, or any subsequent changes, they will not be allowed to access any Coinbase services and must cancel ‘free of charge in the manner set forth below.’
Compliance or Commercialism?
Coinbase was recently accused of tracking how its users spend bitcoin purchased on the website. One users account was closed after he used his coins to buy cannabis seeds and another was closed because he bought coins on Coinbase and apparently sold them on Localbitcoins. While the use of coins to purchase such seeds could be questionable from a legal standpoint, selling your coins on another website is certainly not.
The California based company defended itself by claiming that these steps were necessary if they wanted to remain in compliance with regulations. Of course, these regulations do require companies to verify identities (Know your Customer) and monitor for possible criminal activity such as drug purchases and money laundering. But do these regulations require a company to pry into a customer’s credit history?

This post was published at Coin Telegraph on 2015-01-09.