Coinbase's fixed-rate lending business faces a threatened lawsuit from the SEC, delaying its launch until at least October
"But the SEC is now telling us that if we launch the lending product, they intend to sue."Author: Gu Yu
Coinbase announced in a blog today that the SEC has issued a Wells notice regarding the Coinbase Lend program, which is the official way for the regulatory agency to inform the company of its intention to sue in court, severely hindering the company's plans to launch its lending product.
At the end of June this year, Coinbase planned to launch a fixed-rate lending product for USDC, where users would automatically have savings services for the USDC in their accounts after successfully registering on the Coinbase platform, while Coinbase would lend the users' USDC to "verified borrowers" at a fixed rate of 4%, significantly higher than the dollar savings rates of U.S. commercial banks, but it has not officially launched yet.
Coinbase stated that the lending product plan does not qualify as a security; it is not an investment contract or note. Customers will not "invest" in the program but will lend their USDC held on the Coinbase platform to funds related to their existing relationships.
However, to gauge the regulatory agency's stance, Coinbase still submitted the plan to the U.S. SEC and answered all of the SEC's questions in writing and in person.
"But they are now telling us that if we launch the lending product, they intend to sue. We asked the SEC again if they were willing to share their reasons with us, but they refused again," Coinbase said.
"The SEC provided us with the opportunity to submit a written defense for Lend, but it would be futile when we do not know the reasons behind the SEC's concerns," Coinbase stated.
In the blog, Coinbase also criticized the SEC's regulatory attitude, pointing out that mysterious and ambiguous policies only unnecessarily stifle new products that customers want, as well as new products that Coinbase and other companies can safely deliver.
For these reasons, Coinbase has decided to postpone the launch of its lending product until at least October and will keep the public informed about the progress of the situation.
