Coinbase might face legal action from the SEC
Coinbase Global Inc., one of the world’s largest crypto exchange, has reportedly received a Wells notice from the Securities and Exchange Commission (SEC), stating that the agency will take legal actions, if Coinbase launches its Lend product. Coinbase Lend, which has not yet been launched, this feature would allow consumers to earn interest on their crypto holdings.
The exchange has been working with the SEC for six months, and has been requesting for feedback on the Lend product.For Lend, the company was specifically seeking to allow eligible customers to earn interest on select assets on Coinbase, starting with 4% APY on the popular stablecoin, USD Coin (USDC).
After months of trying to engage with the @SECGov on our planned Coinbase Lend product, we recently received notice that it intends to pursue legal action against us. We believe dialogue is at the heart of good regulation, even if the SEC may not. https://t.co/OumvyTPQdj
— Coinbase (@coinbase) September 8, 2021
The SEC has not shared the reason for doing so and refuses to share its assessment on the Coinbase product.
The SEC has repeatedly asked our industry to “talk to us, come in.” We did that here. But today all we know is that we can either keep Lend off the market indefinitely without knowing why or we can be sued. A healthy regulatory relationship should never leave the industry in that kind of bind without explanation. Dialogue is at the heart of good regulation.
The launch of its Lend product will most likely be delayed, at least till October, according to Coinbase. Coinbase stated that it will “continue to welcome additional regulatory clarity; mystery and ambiguity only serve to unnecessarily stifle new products that customers want and that Coinbase and others can safely deliver.”
They promise to keep their customers informed about every step and decision that they take.
As of lately, numerous state agencies have issued warnings regarding similar yield-earning accounts from BlockFi Lending LLC. Regulators are considering heading after other companies offering similar products, reported Bloomberg recently.