The U.S. Securities and Exchange Commission threatens to sue Coinbase for lending products

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Coinbase update

Executives said that the US Securities and Exchange Commission warned that if Coinbase launches a new digital asset lending product, it will sue Coinbase and issue a subpoena to the cryptocurrency trading platform to provide it with more information.

Coinbase’s Chief Legal Officer Paul Grewal stated in a blog post that the company had become the first publicly listed major cryptocurrency exchange in the United States in April, but has received a notification from the regulator’s Wells stating that if Coinbase introduces cryptocurrency Currency, it will take legal action. A new revenue product called Lend.

Lend aims to allow users to earn interest on certain digital assets on the platform.

Grewal stated that the SEC told Coinbase earlier this year that it considers the Lend product to be a security, “but it did not explain why or how they came to this conclusion.”

He added that Coinbase announced the product in June and opened a waiting list to interested users, prompting the SEC to initiate a formal investigation of the exchange and issue a subpoena.

“Although Coinbase will not let Lend enter the market and provide detailed information, the SEC will still not explain why they see the problem,” Grewal said. “On the contrary, they are now telling us that if we launch Lend, they intend to sue.”

Coinbase CEO Brian Armstrong (Brian Armstrong) attacked the US Securities and Exchange Commission on Twitter, calling his actions “rough behavior.”

He wrote: “They refuse to provide the industry with any opinions in writing about what should be allowed and why, and instead adopt intimidation strategies behind closed doors.” “No matter what their theories are, it feels like being with others. Competition/land grabbing by regulators.”

For a long time, Coinbase has portrayed itself as a cautious, regulatory-friendly exchange in the free and unrestrained world of cryptocurrencies-but more and more crypto companies are complaining that the U.S. Securities and Exchange Commission is unwilling to discuss how its rules should be applied. Emerging markets provide clear guidance. space.

Many platforms have begun to provide cryptocurrency holders with interest on lending or “collateralizing” their balances, but the mechanism for repaying the interest is usually complicated, with little regulatory supervision, and no protection if investors face losses.

Authorities in Washington have been scrambling to set rules for cryptocurrencies. The new SEC chairman Gary Gensler warned that many cryptocurrency trading platforms custody transactions of unregistered securities and should comply with the agency’s regulations. He also called on the US Securities and Exchange Commission to have clear powers to monitor cryptocurrency exchanges, citing the need to protect investors.

Earlier this summer, state agencies in Texas, New Jersey, and Alabama launched a crackdown on BlockFi, which provides interest-bearing cryptocurrency accounts, saying it is equivalent to an unregistered securities issuance. BlockFi denied these claims.

Grewal also believes that Lend does not constitute a security because it is “not an investment contract or bill.”

He added that the company will not launch the product until “at least October”-the product initially offered holders of its stable currency USD Coin an annual yield of 4%.

The prices of various cryptocurrencies fell on Wednesday, and by 7 a.m. London time, Bitcoin and Ethereum both fell by more than 12%. Coinbase said that in the past 24 hours, the market as a whole has fallen by nearly 14%.

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