The crypto exchange Coinbase has discontinued its plans to introduce a lending feature that customers can use to earn interest on certain coins, as reported by Bloomberg. The company announced the change by updating a blog post from the end of June, saying it would also drop the waiting list it had set up for the feature.
The cancellation comes after Coinbase received legal warnings about the feature from the Securities and Exchange Commission. Earlier this month, Coinbase said it would postpone the now canceled function “until at least October”.
Coinbase promised that the Lend feature would offer users an APY return of 4 percent if they used the company to lend the company to “verified borrowers”. The company planned the USDC stablecoin to aid the feature, but its price was not materially affected by this news as its value is pegged to the US dollar. The website with information about the program and a registration page for the waiting list now redirects to the Coinbase homepage (but can be viewed on the Wayback Machine).
Coinbase Said It Is Still Looking For “Regulatory Clarity For The Crypto Industry”
According to Coinbase, the SEC threatened the company with a lawsuit if it introduced the lend feature. The regulator argued that Lend traded securities and was therefore regulated as an investment product. In early September, Coinbase’s CEO posted a thread on Twitter saying the SEC wasn’t clear about why the feature is viewed as a security or what Coinbase could do to fix it. Still, the lending function appears to be similar to an interest-bearing bond, which is typically regulated as securities, an obvious subtweet from the SEC points out.
Coinbase said in its cancellation update that it is still looking for “regulatory clarity for the crypto industry”.
According to Coinbase, as part of its investigation, the SEC asked for the names and contact details of everyone on the above waiting list. The company did not immediately respond to a request for comment on what will happen to the data of those who signed up after the waiting list was put on the waiting list.