Brian Armstrong comments on SEC threats to shut down Coinbase lending
Coinbase's CEO, Brian Armstrong, tweeted Tuesday evening about threats from the U.S. Securities and Exchange Commission related to the recently announced yield-generating product.
The SEC refused to tell Coinbase why the product would be a security
Armstrong said the exchange contacted SEC about the yield-generating product, and the SEC told Coinbase that the offering was a security without providing any guidance in compliance with existing laws. The product that SEC is concerned about is called "Lend." It is a product that allows users to earn double-digit returns on USDC deposits on the platform.According to Armstrong, the SEC refused to tell Coinbase why it was a security and declined to meet with the CEO during a visit to D.C. earlier this year. "The SEC was the only regulator that refused to meet with me, saying, 'we're not meeting with any crypto companies,'" Armstrong wrote. "This was right after we became the first crypto company to go public in the U.S."
One point that kept coming up in Armstrong's tweets was that he hoped the SEC would provide more guidance, explaining that the only way to get regulatory clarity at the moment was to go to court.
BlockFi has come under fire for offering a similar product
Chief Legal Officer of Coinbase, Paul Grewal expressed dismay at SEC's actions and questioned the claim that the lending feature could be considered an "investment contract or promissory note."BlockFi, a crypto-financial services company, has also come under fire for offering a similar product that allows users to earn yield with their stablecoins. Because of these services, five states declared that the company violated securities regulations and laws.
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