4% annual crypto returns? Regulation is blocking – Arover.nete

Midsection of businessman covering crystal ball with smoke forming question mark at wooden table

Midsection of businessman covering crystal ball with smoke forming question mark at wooden table

The Coinbase Lend program expected for 2021 may never see the light of day. The exchange planned to pay investors up to 4%, but the SEC is threatening it with legal action.

Will a promising investment product carried by the American giant Coinbase ever see the light of day? The question is valid. The exchange should in principle launch a new program on the crypto market in 2021: Coinbase Lend.

The principle is simple. It consists for Coinbase to remunerate USDC stablecoin deposits up to 4% per year. In return, this liquidity can be made available to other clients in the form of loans.

Crypto loans with interest in the crosshairs

But now, the SEC, the American policeman of the stock exchange already in conflict with Ripple, does not hear it that way. And that quite annoys the leaders of Coinbase, foremost among them its CEO, Brian Armstrong.

The latter was moved in a series of messages published on the Twitter network. To Armstrong, the policies of the SEC are simply incomprehensible. This believes that Coinbase Lend would constitute a security, a financial title.

Clearly, if the program is launched, the regulator will pursue the exchange in court. This is enough to curb the ardor of the firm. However, and this is what the CEO of Coinbase denounces, the SEC does not advance any argument justifying to qualify this program as secruity.

“They refuse to tell us why they think it’s security, and instead, they assign us and demand a bunch of files from us,” Brian Armstrong said indignantly on Twitter. The boss thus criticizes the “really summary behavior” of the policeman of the stock market.

This lack of explanations from the SEC is surprising, the CEO is surprised, recalling that several comparable loan products already exist on the market. Why then ban the one from Coinbase and allow others?

The release of Coinbase Lend on pause

Armstrong is therefore asking that the SEC, at a minimum, clarify its regulatory policy. However, Coinbase is not the only one experiencing some setbacks. BlockFi’s products with interests are also under investigation in the United States.

Coinbase Lend is not yet dead even before its launch, but it is currently postponed until at least October. The exchange wants to give itself time to get clarifications from the regulator.

In a blog post, Coinbase Legal Director Paul Grewal is already surprised. According to him, a loan function can in no way be considered as a ” investment contract or note ».

“Customers will not invest in the program, but rather lend the USDCs they hold on the Coinbase platform as part of their existing relationship. And while Lend’s customers will earn interest from participating in the program, we have an obligation to pay that interest regardless of Coinbase’s broader business activities, ”he explains.