The Chief Legal Officer of Coinbase, Paul Grewal, wrote about an issue the exchange is currently having with the Securities and Exchange Commission. The issue is about the Coinbase Lend program.
The Coinbase Lend program allows the customers to earn interests in select assets of Coinbase. This interest starts with a 4% annual percentage yield on USDC.
Paul explained that the product is ready. However, Coinbase wanted to take every step in alignment with the law. Thus, the exchange met with the Securities and Exchange Commission to receive the legal go-ahead.
The story turned around when the SEC sent Coinbase a Wells notice – a legal document that regulators serve before they sue a company. The basis for this notice, according to the SEC, is that the Coinbase Lend program is a security.
However, Paul held a contrary opinion. He explained that customers will only be lending their USDC, but they would not be “investing.” In addition to the basis for that notice, Paul claimed the SEC are having other issues with the Coinbase Lend program which they haven’t discussed.
On this note, the Chief Legal Officer of Coinbase enthused that efforts to communicate with the SEC have not yielded any result. He therefore implores that the SEC explain the exact issues they are having with the program so Coinbase can know the next step to take.
“A healthy regulatory relationship should never leave the industry in that kind of bind without explanation. Dialogue is at the heart of good regulation,” he concluded.