To avoid a further scuffle with the US SEC, Coinbase decides to drop its plan of crypto lending services with the USDC stablecoin.
Crypto exchange Coinbase won’t be moving ahead with the launch of its Lend product. The announcement came last Friday, September 17, amid the ongoing battle of Coinbase with the US Securities and Exchange Commission (SEC). In the update post, Coinbase wrote:
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. We have also discontinued the waitlist for this program as we turn our work to what comes next.
Coinbase said that thousands of customers across America had signed up for this service. However, Coinbase added that it will continue to bring innovative products for its customers.
Earlier this month, Coinbase CEO Brian Armstrong entered into a brawl with the SEC. The CEO lashed out at the SEC for not offering enough guidance and clarity on crypto products. Besides, he also called out the SEC for engaging in “sketchy behavior”. In a blog post back then, Armstrong wrote:
“The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion. Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date. But once again, we got no explanation from the SEC. Instead, they opened a formal investigation”.
SEC Not Happy with Coinbase’s Staking Services
Coinbase is not the first crypto exchange to initiate crypto lending services. Competitors like Gemini have been already offering crypto lending services to their users. Crypto lending allows its users to earn interest rates much higher than traditional platforms offer.
In particular, SEC seems to have an issue with the staking service that Coinbase was planning to offer. As a result, the SEC told Coinbase that its Lend product is a security. The SEC seems to be getting uncomfortable with the fact that users will be forfeiting the custody of their coins to Coinbase and its partners.
Amid the wild bull run in the crypto market, the SEC has been going aggressively after industry players. It will be interesting to how the regulatory landscape evolves going further.