Coinbase Global Inc. has shelved plans to launch its crypto lending program, Lend, following pressure from the US Securities and Exchange Commission. This decision comes weeks after a public spat between Coinbase and SEC over the same matter. So, why is Coinbase backing down? Here are the details.
Coinbase withdraws “Lend” product
Coinbase quietly announced that they are not launching the lending program, USDC APY, as anticipated in an edited blog post. This comes after the SEC threatened to sue the crypto company if they went ahead with the program that allows users to earn interest from lending crypto assets.
The reversal is totally different from the sentiments issued on social media a few weeks ago by the Coinbase CEO & co-founder, Brian Armstrong, who accused SEC of being sketchy. The company’s chief legal officer Paul Grewal also blasted the SEC on Sept. 8 via a blog post.
According to the recent update, Coinbase also discontinued the waitlist for this program. They say they had hundreds of thousands of customers from across the country who had signed up for the Lend product.
The statement also reiterated the company’s commitment to look for ways to bring innovative, trusted programs and products to their customers.
What does this mean for Coinbase?
The decision to shelve the product is a big blow to the crypto company. The company has been trying to diversify its financial products. In addition, they are also playing catch-up to competitors such as BlockFi Lending LLC, which offers higher-yielding products to their customers.
This unfair advantage is one of the concerns that Armstrong raised in his series of tweets. He questioned why Coinbase was being threatened with legal action while other companies already offer the same features.
Coinbase lost the battle with this one as the SEC under Chair Gary Gensler continues to crackdown and tighten his stance on cryptocurrency products that the agency views as the “Wild West.” This move has drawn lots of criticism from many investors and traders in the US.
Coinbase is viewed as the largest American digital-asset trading platform by US investors. That’s where a huge number of people buy Bitcoin and other cryptocurrencies.
It lost out on a new trading portfolio despite actively engaging the SEC. This sudden reversal over the “Lend” program could be seen as a loss to the company because other crypto players in the market are advancing their portfolios.
It’s also a major blow because the company was planning to diversify its revenue with the new product.
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