Coinbase drops plan to launch product of interest after SEC CEO comments

Coinbase decided to halt plans to launch an interest-earning product two weeks after CEO Brian Armstrong berated the SEC on Twitter for its lack of advice on the matter.

The new public cryptocurrency services company said in a blog update on Friday that it will not be launching Coinbase Lend, which would allow users to earn a 4% annual percentage return on the USDC stablecoin in allowing Coinbase to loan these funds to verified borrowers. Coinbase has also halted its waitlist for the product.

Coinbase shares fell more than 5% on Monday. The stock, which tends to follow cryptocurrency prices since its income is so closely tied to trading, has also been rocked by the broader sell-off of the crypto market. The price of bitcoin fell 10% on Monday.

“We have had hundreds of thousands of customers from across the country who signed up and we would like to thank you all for your interest,” the post said. “We will not stop looking for ways to bring innovative and reliable programs and products to our customers. “

A Coinbase spokesperson declined to comment beyond the content of the blog post. The SEC did not immediately respond to a request for comment.

On September 7, Armstrong suggested in a storm of tweets that the Securities and Exchange Commission had been vague and apparently unwilling to provide advice and clarification to Coinbase, which had planned to launch the interest-generating product this month. , then delayed it until October and made serious efforts to keep an open conversation with Washington. He also revealed that the company had received a notice from Wells of the SEC regarding the product of interest, threatening to sue Coinbase if it decided to go ahead with the launch.

SEC Chairman Gary Gensler said last week that the agency was carefully examining crypto-related assets to determine if they fell under securities laws and had made no secret of its interest in increased regulation. from space.

Some investors have likened the product offered by Coinbase to a simple bond, which would then subject it to SEC oversight.

Investor uncertainty over the regulation of stablecoins has intensified in recent weeks. Coinbase’s announcement on Friday coincided with a New York Times report that the Financial Stability Oversight Council may designate stablecoins as systemically risky, similar to the big banks, which would subject them and their operators, increased regulatory requirements and control.

Stablecoins are digital currencies designed to be less volatile than other cryptocurrencies by pegging their market value to an external asset like the US dollar. They have become increasingly popular this year for generating return in increasingly popular and complex decentralized finance businesses, or DeFi.

The president’s financial markets task force is also developing a report on stablecoins, and the Federal Reserve is expected to release a paper on central bank digital currencies this month that could address the risks presented by stablecoins.