The United States Securities and Exchange Commission (SEC) has threatened to sue Coinbase if the crypto exchange goes ahead with its plans to launch a program that allows users to earn interest by lending crypto assets, announced on Wednesday. the society.
The SEC, which regulates financial institutions in the United States, has issued a Wells Notice to Coinbase, the official way in which it tells a company that it intends to sue it, said the general counsel of Coinbase, Paul Grewal, in a blog post.
Grewal said Coinbase will delay the launch of its “Lend” product until at least October as a result.
Earlier this year, SEC Chairman Gary Gensler called for tighter regulation of cryptocurrency exchanges.
âThis is a fairly volatile asset class, you could say very volatile, and the investing public would benefit from greater investor protection on crypto exchanges,â Gensler said in a speech at the annual conference of the Financial Industry Regulatory Authority (FINRA).
Cryptocurrency loans are growing in popularity
Programs that allow owners of cryptocurrencies to lend them out in exchange for interest are increasingly common around the world, but some regulators, particularly in the United States, have started to voice concerns, arguing that these products should comply with existing securities laws.
The U.S. state of New Jersey in July ordered cryptocurrency platform BlockFi Inc to stop offering interest-bearing accounts that have raised $ 14.7 billion (â¬ 12.4 billion) from investors.
Grewal said in his blog that the SEC’s concerns over the Coinbase âLoanâ were related to the regulator’s belief that the product involved a security.
Grewal said Coinbase believes this is not the case.
The SEC did not respond to an after-hours request for comment from Reuters.