Coinbase Closes Shop on Lending Product
Coinbase has pulled the rug on its lending product which was scheduled for release this month. This comes on the heels of comments from the US-based crypto exchange CEO Brian Armstrong in which he revealed that the US Securities and Exchange Commission failed to clarify the issues surrounding the product.
Coinbase announced back in June that it was releasing the Lend product in September. Announcing the halt in a Friday update, Coinbase users will no longer have access to the Lending product. With Coinbase Lend, the US exchange sought to allow users to earn 4% interest on every stablecoin USDC deposit. The USDC deposits could then be borrowed by other verified users for trading. Coinbase has also discarded the sign-up list for the program.
US SEC Threatens Coinbase with Lawsuit
As of last week, the US SEC had issued a notice to Coinbase admonishing the exchange not to roll out the program. The notice also contained a lawsuit threat to Coinbase if it went ahead to launch the lending product. On account of the discontinuance, Coinbase’s shares fell by 3.5% as the new week started. Its stock corresponds with the movement of the crypto market since most of the exchange’s activities revolve around trading.
In the post where Coinbase announced the discontinuance of the proposed product, it thanked users for their support while noting that there will be more innovative products in the future.
After the SEC’s warning letter arrived, Coinbase’s Chief Legal Officer, Paul Grewal had argued that the Lend product is not an investment note or contract. Criticizing the US SEC, Grewal expressed displeasure over the silence and evasiveness of the regulator on the status of the Lend product. Industry experts have debated that the US SEC is likely considering Coinbase’s product as a security.
SEC head, Gary Gensler recently revealed that the commission is critically examining cryptocurrencies to determine their status and if they are covered by Securities regulations. The commission has not minced words either on upping the ante on regulations in the sector.
US Regulators Consider Stablecoins’ Regulations
There are also reports that the US SEC will regulate stablecoins. Investors have expressed fears for the outcome of the proposed regulations. Another report indicated that the Financial Stability Oversight Council is likely to tag stablecoins as risky. Earlier this month, Gary Gensler, expressed concerns over what the increasing usage of stablecoins meant for the fiat dollar. Gensler also added that investors were hiding behind stablecoins and other digital currencies to evade taxes.
President Biden’s Working Group on Financial Markets is examining a stablecoins’ report, and the Fed is also working on a separate report for CBDCS in which it will address the risks of stablecoins. Despite the heightened calls for regulations, crypto adoption is fast spreading in the US.
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