As SEC Lawsuit Looms, Coinbase CEO Describes The Agency’s Behavior As “Sketchy”
08 September 2021 - 8:26AM
NEWSBTC
The regulatory battle with DeFi is heating up. The SEC now
seemingly has it’s eyes set on arguably the largest cryptocurrency
exchange in the United States. The news comes after five U.S.
states sent individual notices to DeFi platform BlockFi in recent
weeks. This week, reports have surfaced that Coinbase is facing
regulatory scrutiny over it’s upcoming, yield-generating Coinbase
Lend product. Coinbase CEO Brian Armstrong had quite a bit to say
about it, describing the SEC behavior as “sketchy”. Coinbase
Expresses Frustration Coinbase issued a strongly-worded blog post
that broke the word over the agency’s threats, titled “The SEC has
told us it wants to sue us over Lend. We have no idea why.” Posted
by Coinbase Chief Legal Officer Paul Grewal, the post explains that
the government agency issued a Wells notice last week regarding the
company’s upcoming Lend product – despite what Coinbase describes
as “months of effort by Coinbase to engage productively.” A Wells
notice is a regulatory letter that notifies preparation of
enforcement action. The Coinbase Lend product intends to allow
consumers to earn 4% APY on stablecoin USDC as a starting point for
select interest-earning assets. The blog states that rather than
preemptively launching the platform, the company took a proactive
approach in advising the SEC regarding it’s intent first. The blog
post continues on to state that despite these efforts, along with
compliance with reasonable SEC requests, the agency intends to sue
should Coinbase launch the Lend platform. The post closes stating
that for the time being, the Lend platform will not launch until at
least October, reiterating that “dialogue is at the heart of good
regulation.” Unfortunately, it seems to be a one-way conversation
thus far. The SEC is seemingly incentivizing an “ask for
forgiveness, rather than permission” policy. As crypto's total
market cap continues to grow, regulatory question marks becoming
increasingly apparent. | Source: CRYPTOCAP - TOTAL on
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Coinbase CEO Brian Armstrong took to Twitter to express some
frustration as well. In a tweet thread spanning over twenty tweets
long, Armstrong leads off with “some really sketchy behavior coming
out of the SEC recently…” Armstrong goes on to recap the blog post
in brief, with the sticking point seeming to be that the SEC is
describing the lending feature as a security, without providing any
sort of elaboration or specification as to how or why that would be
the case. These circumstances could set a very interesting
precedent moving forward on the leeway the SEC is given on how,
what, and why the SEC determines what is and isn’t a security. To
date, Coinbase’s efforts to be transparent and communicative with
the agency don’t seem to be reaping rewards. We’ll see if that
continues to be the case. As Armstrong aptly states to close out
his tweet thread, “hopefully the SEC steps up to create the clarity
this industry deserves, without harming consumers and companies in
the process.” Related Reading | Panama To Recognize Bitcoin As
Payment Alternative, Issues New Regulations Featured image from
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