After SEC Pressure, Coinbase Decides To Drop Interest Product

It was just a couple weeks ago that Coinbase posted a blog post, paired with a hefty Twitter thread from CEO Brian Armstrong highlighting recent challenges with the SEC.

Armstrong explained the company’s habits as “sketchy” after the SEC relatively threatened the exchange that a claim would be impending need to Coinbase introduce their anticipated interest-yielding product, Lend. If Armstrong’s tweet thread didn’t give it away, the company’s blog post, spearheaded by Chief Legal Officer Paul Grewal, was undoubtedly lined with some of the firm’s frustrations.

Now, less than a month later on, reports have actually emerged that Coinbase has actually chosen to stop it’s strategies to launch Coinbase Lend.

A Threat To DeFi?

The news comes less than a week after SEC Chairman Gary Gensler told CNBC that his commission is under-staffed. Gensler echoed those beliefs in a Senate testament recently, mentioning that the SEC “needs a lot more people.” He added in the testimony that he believed previous judiciary decisions established that many cryptocurrency tokens “do come under the securities law.” Gensler took the function with the SEC previously this year, and was available in with high expectations from retail financiers.

Elsewhere in the market, some state regulators seem to be working to try to fill the SEC’s role with interest-yielding products already on the market. A handful of state regulators in current months began legal action versus BlockFi for it’s loaning items. In the past week, some state regulators have shifted focus to pursue action against Celsius as well. New Jersey, Texas and Alabama are 3 states that are pursuing both BlockFi and Celsius with claims that the companies are using homeowners unregistered securities.

Regardless of the eventual outcome, the growing popularity of yield-generating tokens and stablecoins are becoming of increased importance to regulators, and are likely bound to be responsible for federal oversight at a higher level than currently seen. The schedule and degree of oversight stays to be seen.

Elsewhere In The Coinbase Rumblings

The powerhouse exchange continues to build on their flagship products to deliver business growth. Last week, the exchange released a high-demand scrap bond with orders totaling up to $7B. In recent months, the company announced it’s intent to launch a “crypto app store” and added payment support for Apple Pay.

Safe to state it’s been a hectic quarter for the busy exchange. However, it stays to be seen what completion outcome is for rivals like BlockFi and Celsius. In the meantime, it seems that Coinbase may be working to try to propose regulatory framework that can help the SEC and other regulatory figures embrace the market without overstepping boundaries for crypto consumers.

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