Coinbase Cancels Launch Of Crypto Lending Program – Finance and Banking


United States:

Coinbase Cancels Launch Of Crypto Lending Program


To print this article, all you need is to be registered or login on Mondaq.com.

Coinbase canceled the launch of a program that
would have allowed customers to earn interest by lending USD Coin,
a dollar-based stablecoin created by the company, to Coinbase.
Coinbase’s decision follows the reported threat by the SEC to
bring an enforcement action (see previous coverage) should Coinbase follow
through with the launch. Coinbase also clarified that it ended its
waitlist for the program.

Commentary

The Coinbase program was clearly the offering of a
Coinbase debt security to retail investors without
registration under the Securities Act. While the SEC may not have
been as transparent as it should have in the reasoning
for its determination that the program involved securities, the
legal status of the program was not really a close call
(see prior commentary). Thus, creators of digital
asset products should not assume, based on this case, that the SEC
will necessarily deem their products to be securities.  While
there is little doubt of SEC Chair Gary Gensler’s general
skepticism of digital assets, this event is not as significant
as the publicity surrounding it makes it out to be.  

Primary Sources

  1. Coinbase Blog Post: Update as of 5pm ET, Friday,
    September 17th: we are not launching the USDC APY program announced
    below

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

POPULAR ARTICLES ON: Finance and Banking from United States

Are Income Share Agreements Loans? The CFPB Says Yes

Sheppard Mullin Richter & Hampton

Last month we wrote a blog relating to a consent order entered into by the California Department of Financial Protection and Innovation (DFPI) with a servicer of income share agreements.

LIBOR Transition: BSBY Out Of The Gates First

Duane Morris LLP

With all the regulator and market focus on SOFR as the LIBOR replacement of choice, it’s easy to forget that there are other replacement rates vying for market attention.