Coinbase’s efforts to play hard with the Securities and Exchange Commission didn’t last too long. The cryptocurrency exchange had angered the regulatory commission over its plan to launch a crypto lending product, with the SEC sending the company a Wells notice stating that the agency would sue Coinbase if it launched its lending product. crypto called Lend.
Less than a few weeks after the publication of a provocative blog post titled “The SEC told us they wanted to sue us for Lend. We don’t know why. the company quietly announced this weekend that it would ultimately not be launching the Lend product.
The company quietly added an update to its launch article for Lend on Friday, detailing in part:
As we continue our work to seek regulatory clarity for the crypto industry as a whole, we have made the difficult decision not to launch the USDC APY program announced below. We have also ended the waiting list for this program as we move our work forward.
The loan was far from an anomaly in the world of crypto exchanges; Investors can find similar features in platforms such as Gemini, which allow users to lend their crypto holdings to the exchange against the promise of earning much higher interest rates than those offered by the accounts. traditional savings. Coinbase planned to launch the Lend product with the feature allowing users to wager USDC stablecoin and win (as a starting rate) 4% APY.
The SEC, which has long complained about the limited resources at its disposal, has pursued a limited number of cases against crypto products, but does not appear to have been very comfortable with the fact that users are essentially forfeiting custody. of their coins to Coinbase and its partners, while indicating that the Lend product did have a title. Coinbase, which has made it part of its brand that it coordinates closely with regulators, had tried to take things slowly while remaining convinced the product was unrelated to security.
“The SEC told us they considered Lend to involve a stock, but didn’t want to say why or how they came to that conclusion. Rather than getting discouraged, we chose to continue to take things slowly. In June, we publicly announced our loan program and opened a waiting list, but we did not set a public launch date. But again, we had no explanation from the SEC. Instead, they opened a formal investigation,“, We read recently on the blog of the company Coinbase.
The big question is what this means for other crypto exchanges, and whether this act marks the start of a more aggressive streak for SEC Chief Gary Gensler’s commission in the crypto world, particularly in relation to concerns DeFi mechanics.