In Brief:
- Coinbase has cancelled its plans to introduce Lend, a programme that would pay 4% interest on USDC holdings.
- The SEC threatened to sue Coinbase if it launched the product.
Coinbase has cancelled plans to launch its lend program due to the SEC’s conclusion that it would constitute security.
Coinbase, unveiled Lend program plans in June, claimed that it was later warned by the Securities and Exchange Commission (SEC) that such a product would violate securities legislation. According to Coinbase CEO Brian Armstrong, the SEC requested a collection of records from the exchange and wanted testimony from its employees just weeks before its planned launch.
The SEC, according to Armstrong, declined to explain why the product was categorized as security at the time. Other observers, such as Anderson Kill attorney Preston Byrne, argued that such loan instruments are definitely securities because they are virtually unsecured bonds.
What Was the Lend Program?
According to this program, customers could earn around 4% APY by lending their holdings of Circle’s Stablecoin USDC. USDC is a cryptocurrency linked 1:1 to US dollars, to Coinbase, which would subsequently lend the funds to other institutions through the Lend programme.
Statements Made by Coinbase:
Coinbase stated on Friday: “Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world. 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.”
Hundreds of thousands of individuals have signed up for Coinbase’s waitlist, which has now been cancelled, according to the company.“We will not stop looking for ways to bring innovatively, trusted programs and products to our customers.”
The cancellation of Coinbase’s Lend programme came as soon as regulatory action against BlockFi and Celsius began.
BlockFi and Celsius are under investigation in multiple states and maybe on the SEC’s radar, though no action has been taken yet.
