US regulators are planning to go after Coinbase if it launches a planned program that would allow users to earn interest by lending crypto assets.
According to a Wednesday blog post, the leading cryptocurrency exchange platform received a Wells Notice from the Securities and Exchange Commission (SEC), signaling its intention to sue the company.
Following the notice, Coinbase decided to delay the program until at least October, according to Paul Grewal, the company’s top legal officer.
Coinbase explained that it has been engaging with the SEC for about six months, and the SEC’s reservations on its ‘Lend’ product were based on its belief that the offering involved securities, which Coinbase does not believe to be the case.
According to Coinbase CEO Brian Armstrong:
They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.
Several regulators in the US have expressed concern over the burgeoning amount of programs that allow cryptocurrency owners to lend their holdings for interest, claiming that such products should conform to current securities regulations.
Earlier this year, decentralized trading and lending cryptocurrency platform, BlockFi, received an order from the New Jersey Bureau of Security to stop accepting new local customers from July 22.