Coinbase has received a warning from the SEC regarding its highly interesting crypto lending product. The product intends to pay 4% interest on the savings of stablecoin owners. However, this idea does not match the opinion of regulators: “If we bring Lend to market, they intend to bring legal action,” according to Coinbase.
SEC Attempts to Prevent Coinbase from Launching it Crypto Lending Product
This move could prove to be the first step for the SEC to monitor such products and sue companies that offer such products. It also means this highly competitive space with many exchanges will have to re-evaluate its products before the SEC prosecutes them.
In response to the SEC warning, Coinbase’s legal officer Paul Grewal wrote a blog post to educate the community about the threat. At the same time, the executive spoke about the talks on Lend between the US Securities and Exchange Commission and the company over the past six months.
It has been announced that plans for this product will take shape in June. However, the U.S. Securities and Exchange Commission has attempted to prevent Coinbase from continuing to launch the product.
When it was first introduced to the public, Lend was suggested as a highly interesting product. It promises to offer “reassurance guarantees” to replace FDIC insurance in traditional interest-bearing accounts. This product is only valid for USDC stablecoins.
The lack of clarity about the SEC’s concerns about product supply led Coinbase CEO Brian Armstrong to comment that it might choose to fight the SEC as a “last resort” in court.
In a Twitter post, Armstrong expressed disappointment and anger at the SEC. According to the executive branch, despite attempts to cooperate with the agency, the SEC has failed to maintain transparency about its crypto policy. He said it is now using a “closed-door intimidation strategy”.
The Coinbase CEO also emphasized the same points that Ripple made in its lawsuits against the SEC.
Ripple CEO Welcomes Coinbase to the Party
Ripple CEO Brad Garlinghouse quickly noticed what happened to Coinbase and wrote on Twitter:
SEC fees on well-known exchanges can cause problems for the crypto space and other companies that offer similar high-yielding products (which can be viewed as securities). In fact, according to many people, Coinbase might just be the first batch. Other companies are likely to be added to the SEC’s warning list soon.
Legal advice also appeared soon, attorney Preston Byrne wrote on Twitter: