If you know about cryptocurrency, you must have heard of Coinbase! It is a fairly popular online platform that allows traders, merchants, and consumers to make transactions with cryptocurrency or digital currency.
According to recent reports, Coinbase has decided to terminate the expected launch of its Lend program which was intended to allow customers to get interest on certain coins, as mentioned in a report by The Verge. So, if this feature wasn’t canceled, customers would have earned interest on buying certain coins from Coinbase, is it even ethical considering competition?
Well, the Securities and Exchange Commission (SEC) did not think so and warned Coinbase of the legal consequences that it could be facing on the launch of its new Lend feature. Following the warning, the company decided to quit on this feature, as it announces the change in plans by updating an old blog from June. The Verge notes that earlier this month, the cryptocurrency exchange platform announced to delay the service until at least October but right before that, its permanent cancellation has been declared.
So, what was this Lend feature that sparked doubts in SEC compliance?
Bloomberg notes that Lend feature from Coinbase was supposed to offer 4 percent APY returns to users if they allowed the platform to trade their coins as loans to verified borrowers. As mentioned in a report by The Verge, Coinbase had planned to use stablecoin USDC to power this new feature, but the prices were not that much affected to make a significant impact, the reason being that its value is anchored by the US dollar.
Anyhow, we cannot call it a fight between Coinbase and the SEC but the regulatory body has not been clear with why it has problems with this newly canceled feature. According to Coinbase, the company was threatened by the SEC with a lawsuit if it launches the Lend feature and as mentioned in a Twitter thread about the same, the SEC argued that Lend would be dealing with securities and therefore must be considered as an investment product. Even analysts side with the SEC saying that the Lend feature seems similar to an interest-bearing bond which is usually regulated by the SEC, as noted by The Verge.
There is a lot of something that we might be missing in this story but Coinbase and SEC are both unusually quiet on the matter. The crypto exchange company silently canceled the Lend program to avoid any legal battles with the regulatory body. What do you think about this?
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