(Reuters) – The US Securities and Exchange Commission has told Coinbase Global Inc. that it plans to sue the cryptocurrency exchange if it goes ahead with launching a program that allows users to earn interest by lending digital assets, Coinbase said
The highest US market regulator has issued Coinbase with a statement that it intends to legally charge the company, Coinbase's General Counsel, Paul Grewal, said in a statement on Tuesday. Coinbase now plans to delay the launch of its "Lend" product until at least October.
"The SEC does not comment on the existence or if there is no possible investigation," a spokesman for the agency said.
The SEC has reviewed the crypto world. Crypto advocates have hoped that Gary Gensler, who became SEC chairman in April, would give the rule clarity to an industry that has been operating in a regulatory gray area.
But Gensler is seeking more authority for the agency to oversee cryptocurrency trading, lending and platforms, a world he described last month as a "wild west" full of fraud and investor risk.
Mr. Gensler has said that certain digital assets and platforms act as or offer securities, leading them under SEC supervision.
In a long Twitter thread, Coinbase CEO Brian Armstrong criticized the agency's handling of the company's plans to launch a lending product The SEC has decided to be a security. Both the CEO and the General Counsel said that Coinbase disputes this view.
Mr. Armstrong said he had been trying to meet with regulators for several months and received legal notice after notifying the SEC of plans to proceed with "Lend" in a few weeks.
Program that allows owners of cryptocurrencies to lend them at interest. is becoming more common around the world, but some regulators, especially in the United States, have begun to raise concerns, arguing that such products should comply with applicable securities laws.
In July, the US state of New Jersey ordered the cryptocurrency platform to stop offering interest-bearing accounts that have raised $ 14.7 billion from investors.
“If we end up in court, we can finally get clarity on the regulations that the SEC refuses to provide. But dispute resolution should be the last resort for the SEC, not the first, Armstrong said on Twitter.