Coinbase Rolls Back Its USDC Lending Plans Fearing SEC Lawsuit
In the freshly brewing battle between Coinbase and the SEC, the securities regulators seem to be winning as of now. Last Friday, September 17, crypto exchange Coinbase (NASDAQ: COIN) released an update stating that it will roll back its plans to launch the USDC APY program.
This happens as the U.S. SEC threatened a lawsuit if coinbase doesn’t follow the seucities laws in the stablecoin lending. In an update to its launch post, Coinbase noted:
As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We have also discontinued the waitlist for this program as we turn our work to what comes next.
Coinbase had already received interest from thousands of customers across America to sign-up for the program. However, Coinbase noted that it will continue with its efforts in bringing innovative and trusted programs to its customers.
SEC has A Problem With Lending and Staking
Crypto lending is nothing new as exchanges like Geminin have been already offering it. However, through it Lend product, Coinbase also wanted to allow its users to stake their USDC stablecoins and earn 4% APY.
It seems that the SEC isn’t comfortable with the fact that the investors will forfeit the custody of their coins to Coinbase and their partners. They also indicated Coinbase that its lending program does involve a security.
Coinbase CEO Brian Armstrong lashed out at the SEC for threating the exchange of the lawsuit. In fact, the CEO also called out the SEC for its “sketchy behaviour”.
However, this isn’t going to stop Coinbase from bringing new products to the market. On Monday, September 20, Coinbase announced its “Prime” brokerage services for 9K institutional investors. Coinbase has been one of the most-preferred destinations for institutional trading.
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