Coinbase halts lending program after SEC threatened to sue

Coinbase has decided to cancel its cryptocurrency lending program shortly after the United States Securities & Exchange Commission decided to go after the digital asset firm. Earlier this month, it was revealed that the agency planned to sue Coinbase over its Lend product.

SEC clamps down on crypto lending products

The Delaware-headquartered cryptocurrency exchange will discontinue its controversial lending product as it continues to seek regulatory clarity. According to the official blog post, Coinbase has canceled its waitlist of hundreds of thousands of customers who signed up for the program.

The lending program would initially allow users to earn interest on certain cryptocurrencies, starting with the stablecoin USD Coin (USDC).

Coinbase CEO Brian Armstrong revealed earlier this month that the US SEC has planned to sue the exchange over its lending feature, although the two parties have been in discussions prior to the firm setting the product’s launch date. 

Armstrong said that the securities regulator failed to reveal the reason for believing that the yield program could be violating securities laws. He further highlighted that lending products have been in the market for years, adding that the exchange was subjected to unnecessary scrutiny.

The SEC has urged companies to come forward and have discussions with the agency. However, Armstrong stressed that Coinbase had done so, yet the agency has failed to provide a reasonable explanation behind planning to sue the crypto exchange.

Coinbase was further highlighted by SEC chair Gary Gensler last week as he appeared before the Senate Banking Committee to provide testimony on the agency’s work. 

Singling out the Nasdaq-listed firm, Gensler stated that the exchange could be facilitating the trading of dozens of coins that could be categorized as securities.

Two other popular lending platforms, including BlockFi and Celsius, have both come under regulatory scrutiny in recent weeks over their lending offerings.