In June, rumors swirled that Coinbase was poised to roll out a lending pool focused on USD Coin (USDC), a stablecoin that is pegged to USD. That launch will not happen, the cryptocurrency exchange said, as the top US regulator has intent to take the company to court.
Coinbase disclosed in a blog post that it had dropped plans to release its interest-earning product and discontinued the waitlist for this program as they turn their work to “what comes next.”
Coinbase revealed earlier this month that the SEC is threatening to sue the cryptocurrency exchange if it launches its yield-generating product, dubbed Coinbase Lend.
The popular exchange, which went public by means of a direct listing five months ago, had planned to launch the DeFi instrument in the coming weeks.
Coinbase’s shares have hit fresh lows after the SEC said it intends to sue the cryptocurrency exchange and services firm over the product. The company’s chief executive officer, Brian Armstrong, indicated that Coinbase was caught off guard by the SEC’s threat considering its efforts to engage with regulators since its IPO.
The product’s launch, which would allow Coinbase users to earn a 4% annual percentage yield on its USDC stablecoin, has been delayed until at least October.
“As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest. We will not stop looking for ways to bring innovative, trusted programs and products to our customers,” the popular exchange concluded.
Coinbase had already reached out to the Securities and Exchange Commission before releasing the DeFi product. The SEC responded by telling the exchange this lend feature is a security.
“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,” Armstrong said on Twitter.
Coinbase revealed plans last week to raise an extra $1.5 billion through a private debt offering. The cryptocurrency platform, which is listed on the Nasdaq exchange, will sell so-called senior notes, which will mature between 2028 and 2031.
Earlier in March, Coinbase was ordered to pay $6.5 million in restitution to resolve civil charges brought by the CFTC for inaccurate reporting as well as wash trading on its institutional platform.