Leading cryptocurrency exchange Coinbase has suspended its plans to launch a high-yield lending product, called Lend, after the US Securities and Exchange Commission (SEC) threatened the company with a lawsuit.
As Crypto News Australia reported earlier this month, Coinbase announced plans for launching Lend but the company immediately received a warning from the SEC, which viewed the product as a “security”.
The SEC told us they consider Lend to involve a security, but wouldn’t say why or how they’d reached that conclusion. Rather than get discouraged, we chose to continue taking things slowly. In June, we announced our Lend program publicly and opened a waitlist but did not set a public launch date. But once again, we got no explanation from the SEC. Instead, they opened a formal investigation.
Coinbase blog post
In a series of tweets, Coinbase CEO Brian Armstrong expressed his frustration as to why the SEC didn’t disclose the reason it viewed the lending product as a security.
Coinbase to Submit a Regulatory Proposal, Confirms COO
The Twitter thread sparked rumours about Armstrong working on a regulatory proposal submitted to the regulatory institution. These rumours were confirmed by Coinbase COO Emilie Choi, who also expressed her concerns for the lack of regulatory certainty in the US.
We are regulated by more than 50 regulators right now, [though] I think it’s actually much more than that. If we’re struggling with this, then what is your audience going to be able to do?
Emilie Choi, COO, Coinbase
By “audience” Choi was referring to other crypto companies that are under scrutiny for their lending offerings, some of whom have complied after cease and desist letters from US authorities. The regulatory proposal will have a series of pillars to make it fair for all parties, among them fairness and regulatory clearance.
We just want to make sure that there’s an even playing field, and when we talk about that, I’m talking about traditional financial services and crypto. There should be even playing fields in these different industries.
Emilie Choi, COO, Coinbase
A month ago, several US legal firms joined forces to file class action lawsuits against Coinbase and its executives, including Armstrong, and other officers, for “securities fraud” in relation to Coinbase’s public listing in April.
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