Coinbase Receives A Warning From SEC Over Its High-Interest Cryptocurrency Product
Coinbase has been issued a warning by the SEC (Securities-and-Exchange-Commission) of the United States regarding its crypto product “Lend” having a high interest level. The product aims at paying approximately a 4% tariff to the owners of stablecoins over their savings. Nonetheless, this concept does not seem to befit the regulators’ point of view in the case of Coinbase, as the firm got a warning that the SEC will sue them if they launch Lend.
This step could turn out to be the initial move for the securities commission to observe such products as well as sue the firms providing them. This has another implication that a large number of exchanges require to review its products in advance to the SEC’s pursuit for them. As a reaction to the department’s warning, Paul Grewal (the legal officer of Coinbase) shared a blog post notifying the community regarding the threat. He further described the discussions held between the company and the SEC over Lend for the previous six months.
The strategies for launching the product materialized in June. Nonetheless, since then, the securities department has been attempting to prevent Conbase from moving further with this product. Lend was introduced as a product of high interest when initially introduced to the community. It pledged to provide a “peace-of-mind” guarantee to be an alternative for the insurance named FDIC, which usually comes with conventional interest-bearing accounts. The sole application of the product is on the stablecoin USDC.
The absence of precision in the SEC’s concerns about Coinbase’s product offering was responded by Brian Armstrong (the company’s CEO) as he commented that it might prefer to appear against the department in court if nothing else works out. Armstrong, in a post on Twitter, expressed his frustration and annoyance against the department. As per the executive, notwithstanding the attempts to run along with the agency, the securities department remained unsuccessful in being clear about the crypto policies thereof. Presently, it involves in threatening strategies at the back of closed doors, he added.
Coinbase’s CEO also indicated the exact points as being made by Ripple throughout its lawsuit in contradiction with the SEC. In addition to Ripple, the SEC is in a quest of charging against the prominent exchanges in the crypto-world. Thus, it is probable that the other such firms may be put into the warning list of the SEC shortly.