Coinbase Cancel Plans To Launch ‘Lend’ Due To SEC Lawsuit Threat
Coinbase, one of the leading crypto exchanges, has canceled its plans to launch Lend, a product designed to deliver high-interest returns on USDC stablecoin holdings, due regulatory pressure from SEC.
According a recently updated blog post about the planned initiative, first announced in June, was put on hold following the threat of lawsuit from the U.S. Securities and Exchange Commission (SEC).
The update clarified:
“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world. As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below.”
Hundreds of thousands of people signed up to the waitlist, which has now been discontinued, according to Coinbase.
Coinbase’s Lend program was designed to yield 4% interest on holdings of the USDC stablecoin, much higher than traditional banking industry so called “high yield” accounts, which tend to offer an annual return of just 0.5%. The exchange had plans to later roll out Lend to additional cryptocurrencies.
Coinbase’s Chief Legal Officer Paul Grewal earlier this month said that the SEC had threatened to sue Coinbase if it went ahead with plans to launch the product, as the agency viewed it as a securities offering. The reported threat came following six months of discussions with the agency, Coinbase said. Coinbase’s stock price plummeted 11% following Grewal’s disclosure.
Coinbase CEO Brian Armstrong also went to Twitter and opened a lengthy thread of tweets early September, alongside Grewal’s post about the SEC’s threats, describing what he saw as “sketchy behavior” from the agency. Armstrong suggested that being sued by the SEC could ultimately provide insight about the agency’s concerns.
“If we end up in court we may finally get the regulatory clarity the SEC refuses to provide,” Armstrong wrote. “But regulation by litigation should be the last resort for the SEC, not the first.”
Coinbase’s decision to cancel the Lend program comes on the heels of increased regulatory action against BlockFi, a leading crypto loan and savings firm that provides interest on a number of assets, including Bitcoin and Ethereum. BlockFi and Celsius are facing investigations in several U.S. states and may also be in the SEC’s sights, although the agency has yet to take action.
It very much seems that they are using scaring tactics to kill anything they don’t understand or don’t have clear way to regulate. While the regulators often use the phrase “protect the small investor”, it seems that it’s the big financial institutions that are being protected.
