Coinbase is no longer launching its crypto lending product, the company said Friday.
In September, the exchange’s CEO Brian Armstrong announced the U.S. Securities and Exchange Commission (SEC) had told Coinbase that it would sue the exchange if it launched the product, dubbed “Lend.” Coinbase later quietly updated a June blog post to announce “we are not launching the USDC APY program announced.”
The lending product was supposed to power a crypto savings account that would earn customers a 4% annual percentage yield (APY), a return that’s multiples higher than most savings accounts at traditional banks.
The SEC said Lend would violate long-standing securities regulations, pointing to U.S. Supreme Court cases including Howey and Reves, Coinbase Chief Legal Officer Paul Grewal wrote in a blog post.
Coinbase’s decision also comes on the heels of state securities regulators issuing warnings to crypto lending platforms BlockFi and Celsius, claiming these companies’ products violate state securities laws.
A Coinbase spokesperson referred CoinDesk to the June blog post when reached for comment.
Coinbase shares were trading down almost 5% to $233.32 on Monday afternoon, with the wider slump in crypto prices – bitcoin and ether are both down roughly 8% over the last 24 hours – likely pressuring shares.
UPDATE (Sept. 20, 17:29 UTC): Added share price information in the last paragraph.
Source: Coin Desk