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Coinbase launches DeFi Yield product in 70 countries

Updated: Jul 25, 2024
Published: Dec 10, 2021
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Crypto exchange Coinbase has announced that customers in over 70 countries can now earn yield with DeFi.

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Compound Finance will be used to generate yields

Cryptocurrency exchange Coinbase says it is opening up decentralized finance (DeFi) to customers who want a share of the high returns from lending and borrowing crypto assets, starting with DAI, a stablecoin pegged to the US dollar. Although Coinbase offers its services in 70 countries, including Germany, Spain, and the United Kingdom, DeFi returns are not yet available to customers in the United States.

Customers' DAI is deposited with Compound Finance, which Coinbase describes as an "industry-leading" DeFi protocol. In October, Compound offered a variable annual percentage yield (APY) for providing DAI, ranging from 2.83% to 5.39%. Coinbase explained that the higher rates reflect the unique access to global liquidity and the increased risk associated with DeFi.

Why U.S. customers will not get access to new DeFi services

There is a good explanation for Coinbase not launching the product in the United States. In September, Coinbase CEO Brian Armstrong vented his anger on Twitter when SEC threatened to sue the exchange if it launched its yield-earning product called Lend. Armstrong tweeted that the SEC said Coinbase's Lend was a security. Gary Gensler, the chairman of SEC, repeatedly raised a red flag throughout the year, saying the DeFi industry and the crypto world need more robust consumer protection laws.

At this week's hearing before Congress, Coinbase Chief Financial Officer Alesia Haas said, "We still do not have clarity on why our product wasn't allowed to proceed." That means Coinbase needs to have clarity before deciding whether it can continue to offer its yield product in the US. Rather than wait for an answer, Coinbase decided to expand its DeFi offering in regions that have yet to restrict or regulate such activity.

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