Coinbase reported in a blog post that it doesn’t know why the SEC is threatening legal action.
According to the SEC, the lending product is a security as the action of one person will result in the reward of the other, – in a way, fund owners are expecting returns after putting (investing) their money into the product.
Coinbase has argued that the product is not in violation of securities. Coinbase said “Coinbase’s Lend program doesn’t qualify as a security – or to use more specific legal terms, it’s not an investment contract or a note.”
It went on explaining what it had provided to the SEC, “Customers won’t be ‘investing’ in the program, but rather lending the USDC they hold on Coinbase’s platform in connection with their existing relationship. And although Lend customers will earn interest from their participation in the program, we have an obligation to pay this interest regardless of Coinbase’s broader business activities.
SEC is hiding its reason for not approving Coinbase Lend.
The US exchange said it has explained to the SEC what it intends to do and answered their questions in writing and in person but the SEC replied they consider the Lend product one that involves a security however, they wouldn’t said why and how they think it involves a security.
The SEC had threatened legal action on Coinbase if it moves forward with Lend and as a result, the product will not be launching until at least October, Coinbase revealed.
It also said it will continue to welcome additional regulatory clarity; mystery and ambiguity only serve to unnecessarily stifle new products that customers want and that Coinbase and others can safely deliver, It concluded.
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