What’s more, participating customers’ principal is secure, and we’re obligated to repay their USDC on request.”Ī perceived lack of communication or cooperation by the regulator is what appears to be causing Coinbase to speak out publicly. “And although Lend customers will earn interest from their participation in the program, we have an obligation to pay this interest regardless of Coinbase’s broader business activities. “Customers won’t be ‘investing’ in the program, but rather lending the USDC they hold on Coinbase’s platform in connection with their existing relationship,” Grewal wrote. (Such cryptocurrencies linked to an underlying asset are called “stablecoins.”) Grewal wrote that the program is based on the USD Coin (USDC), a cryptocurrency linked to the U.S. Indeed, Grewal wrote in a public blog that the SEC has issued Coinbase a so-called “Wells notice” that the agency intends to legally charge the company if it proceeds with plans to launch the Lend product, which allows users to earn interest by lending digital assets.Ĭoinbase disputes that the Lend program is a security.
In the case of Coinbase, for example, the SEC has taken issue with the firm’s planned rollout of its “Coinbase Lend” platform.
He also has asked Congress for more specific authority in areas that may be unclear or outside the SEC’s jurisdiction. Gensler has asserted, without offering specifics, that some digital assets and platforms are operating as, or offering, securities, which would bring them under the SEC’s oversight. The debate hinges, more specifically, on the definition of whether cryptocurrencies and related stablecoins are legally defined as securities and are therefore subject to regulation by the SEC. Gensler’s comment came just days after a lengthy Twitter thread by Coinbase CEO Brian Armstrong and a blog post by Coinbase Chief Legal Officer Paul Grewal, criticized the SEC’s handling of the firm’s plans to roll out a lending product that the agencies has determined to be a security.Īt the heart of the legal dispute between the SEC and Coinbase is regulatory jurisdiction related to the rapidly growing and evolving crypto marketplace.
#CONNECTION TROUBLE COINBASE APP SERIES#
His comment is the latest jab in a series of back-and-forth punches between the SEC and top executives at Coinbase over regulatory uncertainty surrounding the cryptocurrency industry. Elizabeth Warren (D-Mass.) that mentioned Coinbase, Gensler replied that Coinbase “haven’t yet registered with us, even though they have dozens of tokens that may be securities.” In response to a hypothetical question from Sen. Senate Banking Committee last week, Gensler warned that cryptocurrency exchanges such as Coinbase should register with the regulator. Commodity Futures Trading Commission (CFTC), Christopher Giancarlo also weighed in, without directly criticizing or taking sides in the debate, saying it is a challenge to apply “90-year-old statutes” to new innovation that was never contemplated. cryptocurrency exchange, offers a preview of what will likely be a lengthy and complex battle over the legal and regulatory framework surrounding cryptocurrencies. Securities and Exchange Commission (SEC) Chair Gary Gensler and top executives of Coinbase, the largest U.S. We welcome feedback, which you can provide using the feedback tab on the right of the page.Ī recent public exchange between U.S. We are improving this feature as we continue to test and develop in beta. The company and law firm names shown above are generated automatically based on the text of the article.
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