The crypto exchange company folded their plans for a lending program under pressure from an impending lawsuit from the SEC.
Last Friday, September 17th the company quietly released a blog post which said it will no longer go forward with plans for Lend. The move comes after Coinbase CEO, Brian Armstrong publicly announced the debacle on Twitter shortly post-SEC warning.
Coinbase Global Inc. initially intended Lend as a product which would pay users to lend out their tokens. In the lead up to the warning from the SEC, Coinbase said it remained proactive with current industry regulations.
Nonetheless, the U.S. Securities and Exchange Commission sent the company a warning. It said that the features of Lend were a security and it would sue Coinbase if it went forward with the product. The SEC also performed a company-wide probe and requested names on the waitlist for the product.
After Armstrong shared the SEC comment, the community responded. Most notably celebrity investor Mark Cuban remarked that Coinbase should act aggressively towards the U.S. regulators. In a follow up tweet he said these are opportunities for the crypto space as it develops rather than allowing officials to move in unannounced.
All the while, Coinbase made big moves in the past month. The company filed for futures and derivatives trading and struck a deal with homeland security. In the latter, Coinbase will offer the department analytics tools.
Over the last year the crypto space exploded with interest and activity from developers and investors alike. However the SEC took note. The U.S. regulators probed the crypto space like never before. First the ongoing battle with Ripple remained a hot topic within the industry.
In addition to Ripple, the SEC took on BitConnect and its founder over a $2 billion crypto fraud issue. It also announced a probe into UniSwap, the developers of the world’s largest decentralized exchange (DEX). This probe came after a statement from the SEC Chairman Gary Gensler in which he said DeFi is not an exception to SEC oversight.
All of this comes as U.S. officials finalize an overarching tax plan for the crypto community. As it stands the bipartisan bill passed by the Senate contains language problematic to industry development. The House added a crypto tax provision which closes the “wash sale” loophole often used by crypto investors.