The SEC Refuse to Allow Coinbase to Launch Lending

The US Securities and Exchange Commission, or SEC, knocks on Coinbase’s door to conduct a regulatory investigation. Coinbase was taken aback and was attempting to ascertain why they had been scrutinized.

Evan Van Ness, the founder of WeekInEthereumNews, said that US regulators may be somewhat receptive to Coinbase implementing lending products. According to Van Ness, the SEC’s behavior may be motivated by reports of the commissioner pursuing BlockFi, which operates as an unregistered hedge fund.

Previously, Coinbase CEO Brian Armstrong detailed the company’s convoluted communication process with the Securities and Exchange Commission surrounding the company’s planned launch of a new loan product later this year. The SEC is being “ambiguous” regarding the legal requirements, according to a discussion on the Coinbase CEO’s Twitter account.

Related: The SEC Has Threatened To Sue Coinbase

Because the SEC is pursuing BlockFi, it is unable to divulge the true reason for Coinbase’s restriction on activity in the Defi market. Additionally, Coinbase reports that the SEC has mandated that the company divulge all prospective user data in order to operate legally in the country. Obviously, Coinbase would have to implement the required KYC for all of its users across all of its platforms and products, current and future.

Anyway, I feel like if you've actually read much of what the SEC has published about "DeFi" then you'd realize that they were often talking about these centralized lenders and the 100x perp crypto futures companies.

They often don't appear to know what "DeFi" actually is

— Evan Van Ness 🦇🔊 (@evan_van_ness) September 8, 2021

BlockFi is another cryptocurrency financing startup that offers products comparable to those offered by Coinbase – BlockFi Interest Accounts (BIA). Alabama determined on July 22nd, 2021, that BIA is a product, not an account.

providing various cryptocurrency investment alternatives for private investors, such as interest-bearing accounts, crypto-backed USD loans, and fee-free trading. According to BlockFi’s website, the company is looking forward to collaborating with US regulators and lawmakers.

However, Evan believes that commissioners are still functioning like regulators who are unable to comprehend what they are taxing or forbidding. Previously, the SEC connected centralized lending and perpetual futures with unreasonably high leverage options to the Defi industry, demonstrating the commission’s unease with the industry’s regulation.

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