Cryptocurrency exchange Coinbase has canceled plans to launch Lend, a product designed to deliver high-interest returns on USDC stablecoin holdings.
A Coinbase representative confirmed the news to Decrypt this morning, referring us to a recently updated blog post about the planned initiative, which was first announced in June but put on hold following the threat of legal action from the U.S. Securities and Exchange Commission (SEC)
“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world,” the update reads. “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.”
Coinbase wrote that it had hundreds of thousands of people signed up to its waitlist, which has now been discontinued. “We will not stop looking for ways to bring innovative, trusted programs and products to our customers,” the update concludes.
Coinbase’s Lend program planned to provide users 4% interest on holdings of the USDC stablecoin—far higher than traditional banking industry “high yield” accounts, which tend to offer an annual return of just 0.5%. The exchange planned to later roll out Lend to additional cryptocurrencies.
Earlier this month, Coinbase’s Chief Legal Officer Paul Grewal claimed the SEC had threatened to sue the firm if it went ahead with plans to launch the product, as the agency viewed it as a securities offering. The reported threat came following six months of discussions with the agency, Coinbase said. Coinbase’s stock price dropped 11% following Grewal’s disclosure.
Coinbase CEO Brian Armstrong posted a lengthy tweet thread on September 7, alongside Grewal’s post about the SEC’s threats, describing what he saw as “sketchy behavior” from the agency. Armstrong suggested that being sued by the SEC could ultimately provide insight about the agency’s concerns.
SEC Threatens to Sue Coinbase Over High Interest Crypto Product
“If we end up in court we may finally get the regulatory clarity the SEC refuses to provide,” Armstrong wrote. “But regulation by litigation should be the last resort for the SEC, not the first.”
Coinbase’s decision to cancel the Lend program comes on the heels of increased regulatory action against BlockFi, a leading crypto loan and savings firm that provides interest on a number of assets, including Bitcoin and Ethereum. BlockFi and Celsius are facing investigations in several U.S. states and may also be in the SEC’s sights, although the agency has yet to take action.