Coinbase Abandons Lend Plans, Clash with SEC Ceases By DailyCoin
- US cryptocurrency platform Coinbase (NASDAQ:) said it will not launch its Lend product.
- Two weeks ago, senior Coinbase executives had criticized the SEC via social media, citing a lack of agency guidance.
On its corporate blog, Coinbase announced that it had abandoned its plans for launching an interest-bearing cryptocurrency exchange. Coinbase Lend, the company’s project to allow users to profit up to 4 percent annually from the USDC stablecoin, was being developed.
Coinbase recently went public and would pay this interest to verified borrowers who loan their tokens. After the US Securities and Exchange Commission threatened to sue Coinbase, the decision was made without additional publicity.
Brian Armstrong, Coinbase’s CEO and senior executives expressed their disappointment several days after receiving the agency’s notice. They challenged the SEC’s position on Twitter (NYSE:).
Change of Tone
But on Friday, September 17, they inexplicably softened their tone by announcing their decision not to launch their Lend product. Coinbase also stated that they had decided to end the wait list for its new product.
Coinbase’s decision affected its shares, which fell just over 5% on Monday. The company’s stock was also affected at the beginning of the week by the downtrend that shook the market for crypto assets.
“We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest,”
the Coinbase post noted.
It also pointed out,
“We will not stop looking for ways to bring innovative, trusted programs and products to our customers.”
Bloomberg published an article on Monday, stating that while neither Coinbase or the SEC were available to comment immediately on their opinions.
On The Flipside
- Coinbase’s decision not to continue with its Lend project and the cessation of hostilities between the company and the SEC coincide with the signing of a $1.36 million contract with the US Department of Homeland Security.
- It has signed several other contracts with government agencies, including those for the Treasury or the Secret Service.
Gary Gensler (the president of SEC), testified last week that all assets related to digital currency are being analyzed in great detail by the agency. This is done to find out if these assets are subject to securities laws.
The official has made no secret of the agency’s interest in increasing regulations on the industry. Some investors believed that the Coinbase product was nothing but a bond. This would be subject to SEC regulations.
Investor uncertainty has grown in recent weeks due to the increased regulation of stablecoins.
Why Should You Care?
A report published by the New York Times on Friday concurred with the crypto exchange’s decision as well.
The Financial Stability Supervision Board, according to the paper, is currently evaluating the status of stable currencies, which are systemic risk assets. This is similar to main banks.
Operating companies and stablecoins could be under greater scrutiny and subject to more regulations if this happens.
After abandoning its stablecoin loan plans, Coinbase made another announcement: “Starting today, Monday, September 20, we will begin accepting inbound transfers from AGLD to Coinbase Pro.”
It added that “Operations will begin at 9 a.m. Pacific time (PT) on Tuesday, September 21, if liquidity conditions are met.”
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