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Coinbase ditches Lend programme after SEC warning

Coinbase has abandoned its planned interest-earning product two weeks after the cryptocurrency exchange revealed that the SEC was threatening to sue over the issue.

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Coinbase ditches Lend programme after SEC warning

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

Earlier this month, chief legal officer Paul Grewal wrote in a blog that the SEC had sent Coinbase a Wells notice warning that it intended to sue in court over the planned Lend programme.

In a 21 tweet-long thread, Coinbase CEO Brian Armstrong accused the watchdog of some "really sketchy behavior," adding that it refused to meet with him in Washington earlier this year.

The Lend programme would have let eligible customers earn interest on select assets on Coinbase, starting with four per cent APY on USD Coin.

Now, in an update to a June blog, the company says it is not launching the programme and has discontinued a waitlist which had seen hundreds of thousands of customers sign up.

"We will not stop looking for ways to bring innovative, trusted programs and products to our customers," says the update.

In his earlier blog, Grewal claimed that the firm could have "simply launched" Lend without approaching the SEC and that other crypto companies "have had lending products on the market for years".

"The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion," he added.

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Comments: (2)

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

Since asking for permission apparently hasn't worked, fintechs might feel encouraged to leverage regulatory gap and become too big to be regulated or seek forgiveness if they fail in that endeavor.

Christopher Williams

Christopher Williams Chairman at RTpay

This unfortunate occurrence for Coinbase indicates one of two things; firstly, the US needs to finalize its overall approach to cryptos and who is to be the single authority to oversee all aspects. Secondly, if it is too limiting (and less than clear) the overall market risks moving offshore, even more than now. 

It's hard to understand how it took so long for the SEC to react on this issue of interest earning - and how aggressively it was managed. It is not as though it is a  new issue within the overall crypto market. 

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