Cryptocurrency exchange platform Coinbase has tossed out plans to start a lending product after pressure from the Securities and Exchange Commission.
Coinbase didn’t broadcast its surrender to the SEC but announced in an update tacked on to a days-old press release that the product, dubbed Coinbase Lend, would be canceled. The move came after the platform’s CEO, Brian Armstrong, accused regulators of “really sketchy behavior” surrounding the product.
Coinbase Lend would have allowed Coinbase users in possession of stablecoin USD Coin to earn at least 4% interest by lending their assets to others on the platform. Coinbase, which had wanted to release the product soon, revealed that the SEC contacted the company and said that it intended to sue.
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Stablecoins such as USD Coin have their value tied to another asset class such as gold or a fiat currency and don’t oscillate in value as wildly as other cryptocurrencies. Stablecoins have caught the eye of regulators, and Treasury Secretary Janet Yellen convened a meeting of top regulators earlier this year to discuss the matter.
In the lead-up to Coinbase Lend’s release, the company revealed that the SEC served it with a Wells notice. Wells notices are sent by regulators to inform firms that legal enforcement is being planned and give companies a month to provide a response.
Armstrong had accused the SEC of “engaging in intimidation tactics behind closed doors,” tweeting earlier this month that his company had worked to be as transparent as possible with regulators but that the SEC did not offer clarity or communication in the lead-up to the lawsuit threat.
There had been an extensive waitlist for the Lend product, although that has now been trashed in light of the regulatory obstacles.
“We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest,” Coinbase said in the update. “We will not stop looking for ways to bring innovative, trusted programs and products to our customers.”
Coinbase, which was the first publicly traded cryptocurrency exchange, has been at the forefront of the cryptocurrency industry as it has burgeoned from obscurity into the portfolios of Wall Street investors.
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Bitcoin, the flagship cryptocurrency, has grabbed headlines for the past few years and went from being worth less than $1,000 per coin in 2017 to a peak of nearly $65,000 in April. Since April, the price of Bitcoin has fallen to its current level of about $43,500.
This month, El Salvador became the first country to adopt Bitcoin as a national currency, although the initial rollout was blemished by technical issues, and instead of posting gains, the digital asset actually dropped in value upon being made legal tender.
