Coinbase CEO Brian Armstrong spoke about the US Securities and Exchange Commission’s strict stance on their proposed DeFi lending services.
On September 8th, Brian Armstrong defended his company’s position on Twitter against the latest attack by Uncle Sam’s tough financial regulator, the SEC.
In a blog post titled “The SEC has told us it wants to sue us over Lend. We don’t know why”. Paul Grewal, Coinbase’s chief legal officer, further explained the situation.
It indicated that the US Securities and Exchange Commission issued a “Wells Notice” to the company, stating that this was the official way for the regulator to notify a company that it intends to sue it in court.
An angry Armstrong stated that millions of people have been lending out crypto assets for several years in order to generate income. He added that Coinbase, whose revenue hit a record $2 billion in the second quarter, has contacted the US Securities and Exchange Commission and informed them of the proposed Coinbase Lend program.
SEC Viewing DeFi Loans As a Security
The credit incentives, which have not yet been introduced, allow “qualified users” in the US to achieve an annual return of 4% only with guaranteed USDC principal deposits.
Obviously, the regulators who recently added DeFi oversight are viewing loans and interest income as guarantees of security, which is very annoying to the Coinbase boss.
“They responded by telling us this lend feature is a security. Ok – seems strange, how can lending be a security? So we ask the SEC to help us understand and share their view.”
He added that the company meets the never-ending requirements of the US Securities and Exchange Commission, but is upset about why they think people put their money in “securities” for revenue.
“They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records from us (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why.”
Armstrong Prefer SEC Provide a Clarity on the Crypto Industry
Armstrong said Coinbase is happy to comply with the law and regulators, but the SEC will not provide clear information and will instead pursue a “closed-door terrorist strategy.”
He added that many other crypto companies are offering similar products, which shows that Coinbase has stood out in some way. The conclusion of the long comment is, “hopefully the SEC steps up to create the clarity this industry deserves, without harming consumers and companies in the process.”
Coinbase said that due to all of these measures, Lend won’t launch until October. In fact, it may never see the sun.