Coinbase, Under Pressure From SEC, Shelves Interest Payments

By:
Chris Gaetano
Published Date:
Sep 21, 2021
Cryptocurrency exchange Coinbase said that it is shelving plans for a new product that would let account holders earn interest on their assets due to the threat of litigation from the Securities and Exchange Commission (SEC), said CFO.com

The product, called Lend, would allow eligible customers to earn interest on select assets on Coinbase, starting with a 4 percent annual percentage yield on USD Coin (USDC), a U.S. dollar-backed stablecoin (a type of cryptocurrency meant  to facilitate exchanges by holding more consistent value than other tokens).

The SEC, a few weeks ago, sent a notice to Coinbase threatening enforcement action should it launch the new product. Paul Grewal, the company's chief legal officer, expressed puzzlement at the SEC, saying that Coinbase has been in communications with the agency for months.

He added that Coinbase could have chosen to just add the product without notifying the SEC, noting that many other platforms have launched lending products this way. But it chose to proactively engage with the SEC because "Coinbase believes in the value of open and substantive dialogue with our regulators."

Brian Armstrong, the CEO, said in a Tweet later that, since then, the SEC has denied them a meeting to explain themselves (though an SEC representative said the agency has been meeting with representatives of the firm). Armstrong intimated that they might sue in the future, saying that maybe then they can get the regulatory clarity they'd need to successfully launch Lend.

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