The US Securities and Exchange Commission (SEC) has warned it will sue if Coinbase moves forward with a plan to offer a new product called Lend that would pay stablecoin owners 4% interest on their savings. The unexpected move is a setback for Coinbase and could spell trouble for other firms that offer high-yield crypto products.
Coinbase had been in discussions with the SEC about Lend for six months.
Coinbase’s Chief Legal Officer, Paul Grewal, announced the SEC threat in a blog post on Tuesday night. In the post, Grewal described how the company had been in discussions with the SEC about Lend for six months but that the agency then abruptly warned last Wednesday it might sue if Coinbase goes forward. The crypto firm publicly announced its plans to launch Lend in June. At the time, the company touted the product as a way for crypto owners to earn far higher interest than regular banks and promised to offer a “peace of mind” guarantee as a substitute for the FDIC insurance that comes with traditional interest-bearing accounts.
Coinbase CEO lashes out at the financial regulator.
In response to the SEC’s legal threat, Coinbase CEO Brian Armstrong lashed out at the agency on Twitter, complaining that his company had attempted to do the right thing, but that the SEC has failed to be transparent about its crypto policies and is instead “engaging in intimidation tactics behind closed doors.” Armstrong also criticized that the SEC has failed to enforce its policies evenly, allowing other companies that failed to seek out the agency’s approval in the first place to operate for many months.
7/ Look….we're committed to following the law. Sometimes the law is unclear. So if the SEC wants to publish guidance, we are also happy to follow that (it's nice if you actually enforce it evenly across the industry equally btw).
— Brian Armstrong (@brian_armstrong) September 8, 2021