The US Securities Regulatory Commission warns Coinbase: Deterring the entire cryptocurrency market

Cryptocurrency trading platform Coinbase Global Inc. It was disclosed in the blog that if customers were to earn interest on some digital tokens, the US Securities and Exchange Commission (SEC) threatened to sue the company.

The US Securities Regulatory Commission warns Coinbase: Deterring the entire cryptocurrency market

This warning also serves as a deterrent to other companies that issue similar products or are eager to try. It is also the clearest signal that the new head of the SEC has given since he took office. That is, regulators will vigorously play a role in cracking down on products that feel risky—even Will do it before the product is launched. As soon as the news came out, Coinbase fell 3.2% to $258.20 in New York.

When Gary Gensler took charge of the SEC in April this year, many cryptocurrency enthusiasts were overjoyed. They felt that they knew finance from the former Goldman Sachs partner, and he also taught digital assets at MIT, and talked to many Washington who knew little about the crypto market. Compared with officials, Gensler’s background and resume are quite different.

However, this good mood soon disappeared. Gensler made it clear whether in his speech or in his congressional testimony that he would rectify the cryptocurrency industry. In July, he referred to the industry as the “barbarian land of the financial industry” and “urgently in need of traffic rules.” Gensler also said that the SEC will also strengthen measures. If the cryptocurrency products provided by these companies involve securities, they will be held accountable, including decentralized finance or DeFi platforms.

The focus of the debate is Coinbase’s Lend product. Although it has not yet been opened, investors who can lend USDC virtual tokens promise to earn 4% every year. USDC is a stablecoin (stablecoin) provided by several companies such as Coinbase. It has developed rapidly in the cryptocurrency market. Traders can easily exchange digital assets for cash, or vice versa.

The game between Coinbase and the SEC is well known. Paul Grewal, the company’s chief legal officer, said in a blog that the SEC determined that Lend was involved in “a security, but not who or how it came to this conclusion.” Grewal added Said, the SEC notified Coinbase, “If we launch the Lend product, they intend to sue”, so Coinbase shelved the product until at least October.

“Stand By and Wait for the Rabbit”

Privately, former officials of the US Securities Regulatory Commission were shocked by the agency’s posture, and said that the Securities Regulatory Commission would generally announce certain sanctions when these companies begin to sell investment products. It can be seen from this that the SEC has found a strong response to cutting-edge cryptocurrency products that are worried about bringing risks to consumers.

“The SEC has been so tough for the first time in so long,” said James Cox, a professor at Duke University School of Law. SEC officials declined to comment.

Coinbase has won the support of at least one long-time opponent of the US Securities Regulatory Commission: Mark Cuban. The billionaire entrepreneur tweeted several tweets, urging Coinbase to fight back and prevent the SEC from winning a legal ruling, otherwise it would give the agency more power over tokens and DeFi. In 2013, the SEC accused him of engaging in insider trading, and Cuban has since settled with the Securities Regulatory Commission.

However, there is one group that would be satisfied with the SEC’s increased scrutiny of Coinbase: that is the Democrats in the US Congress. Elizabeth Warren, a Massachusetts Democrat, has repeatedly urged regulators to play a greater role in oversight of the cryptocurrency market


Posted by:CoinYuppie,Reprinted with attribution to:
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