- Coinbase quietly declared the cancellation of its lending program.
- The US SEC threatened to prosecute the trading platform over the yield program.
- Meanwhile, the Nasdaq-listed company remains without an explanation why the regulator refers to lending yields as security.
Coinbase decided to suspend its crypto lending program following the move by the US Securities and Exchange Commission to inspect the digital asset company. Reports revealed that the regulator aimed to sue the crypto exchange over the lending product.
SEC Goes after Cryptocurrency Lending Product
The leading exchange platform will suspend its debatable lending services as it seeks regulatory clarity. An official post shows that Coinbase canceled the waitlist comprising thousands of clients registered for the lending program.
With the lending program, users could initially earn interest in some digital coins, starting with USDC. Early this month, Coinbase executive Brian Armstrong declared that SEC has plans to sue the crypto platform, citing the lending functionality. Keep in mind that the two have been discussing before the company announced the products launch schedule.
Armstrong revealed that SEC did not disclose its reason to believe that the exchange violates security guidelines with the yield program. He also declared that yield products have existed in the financial space for years. The CEO believes that the crypto exchange was under unnecessary scrutiny.
Meanwhile, the securities watchdog urged firms to step up and discuss their services with the regulator. Armstrong confirmed that Coinbase did that, yet SEC failed to offer a significant explanation on its plans to prosecute the cryptocurrency exchange.
On the other side, Gary Gensler, SEC Chair, highlighted Coinbase in his Senate Banking Committee appearance, testifying the regulator’s work. Gensler stated that the crypto firm might be offering trading services on multiple coins that may fall under the securities category.
Other firms that underwent regulatory scrutiny over the past few weeks include Celsius and BlockFi concerning their lending offerings. For now, SEC seems to shift focus to Coinbase.
What are your views on Coinbase halting its services without a clear explanation by the regulator? Is SEC tight on the crypto space? Feel free to comment below.