SEC Goals for Coinbase Mortgage Product – Enterprise Insurance

(Reuters) – The U.S. The Securities and Exchange Commission has told Coinbase Global Inc. that it plans to sue the cryptocurrency exchange if it continues plans to launch a program that will allow users to earn interest by lending digital assets, Coinbase said.

The leading US market regulator has told Coinbase that it intends to incriminate the company, Paul Grewal, Coinbase's chief legal officer, said in a statement Tuesday. Coinbase is now planning to postpone the launch of its "Lend" product until at least October.

"The SEC does not comment on the existence or non-existence of a possible investigation," said a spokesman for the agency.

The SEC has stepped up its scrutiny of the crypto world. Crypto advocates have been hoping that Gary Gensler, who became chairman of the SEC in April, would bring rule clarity to an industry that operates in a regulatory gray area.

But Mr. Gensler is seeking more authority for the agency to oversee cryptocurrency trading, lending and platforms, a world he dubbed the "Wild West" last month riddled with fraud and investor risk.

Mr. Gensler has said that some digital assets and platforms are operated or offered as securities, making them subject to SEC supervision.

In a long Twitter thread, Coinbase CEO Brian Armstrong criticized the agency's handling of the company's plans to launch a loan product that the SEC has classified as a security. Both the CEO and the chief legal officer said Coinbase denies this view.

Mr. Armstrong said he spent months trying to contact regulators and received legal notice after informing the SEC of plans to proceed with "Lend" in a few weeks.

Programs that allow cryptocurrency owners to borrow for interest are becoming more common around the world, but some regulators, particularly in the United States, have begun to raise concerns, arguing that such products should comply with applicable securities laws.

The US state of New Jersey in July ordered the cryptocurrency platform to stop offering interest-bearing accounts that raised $ 14.7 billion from investors.

“If we go to court, we may finally get the regulatory clarity that the SEC is denying. But litigation regulation should be the SEC's last resort, not the first, ”Armstrong said on Twitter.

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