Coinbase Halts Launch Of Lend Program After SEC Threat
Cryptocurrency exchange Coinbase has halted the launch of its cryptocurrency yield program called Coinbase Lend after the U.S. Securities and Exchange Commission threatened to sue it if the service was launched. The SEC is considering it a security and it refuses to tell Coinbase why they think it’s a security.
Coinbase notes that the Lend program doesn’t qualify as a security or to use more specific legal terms, it’s not an investment contract or a note. Coinbase added that customers will not be investing in the program, but rather lending the stablecoin USD Coin (USDC) they hold on the Coinbase platform.
Despite all engagements with them, the SEC continues to tell Coinbase that they consider Lend to involve a security, but would not say why or how they had reached that conclusion.
The decision comes two weeks after the SEC gave Coinbase what’s called a Wells notice earlier in the month about the planned Coinbase Lend program, despite nearly six months of effort by Coinbase to engage productively with the SEC. A Wells notice is the official way a regulator tells a company that it intends to sue the company in court.
Coinbase was seeking to allow eligible customers to earn interest on select assets on the platform, starting with 4 percent Annual Percentage Yield (APY) on USDC as it explores innovative ways for its customers to gain more financial empowerment on Coinbase.
Coinbase had announced the Lend program publicly in June and opened a waitlist but did not set a public launch date.
Coinbase has now decided not to launch the USDC APY program while it continues to work to seek regulatory clarity for the crypto industry as a whole. It has also discontinued the waitlist for this program, which was signed up by hundreds of thousands of customers from across the country.
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