The real reason behind SEC’s non-compliance with Coinbase
As AZCoin News reported, in a lengthy Twitter thread, Coinbase CEO Brian Armstrong revealed that the U.S. Securities and Exchange Commission (SEC) had threatened to sue the exchange over a lending feature. One of the reasons for today’s decision could be the rumors about the commissioner going after BlockFi, which is acting as an unlicensed hedge fund.
Here is why SEC is not allowing Coinbase to launch lending
This opinion from WeekInEthereumNews founder Evan Van Ness suggested that U.S. regulators may be somewhat reasonable regarding Coinbase launching lending products.
Caveats: I’m not a lawyer, definitely not your lawyer, I dropped out of law school because I found it intensely boring, but decades ago I used to have a decent bit of knowledge in this area from some years of working around it
— Evan Van Ness 🦇🔊 (@evan_van_ness) September 8, 2021
Previously, Coinbase CEO Brian Armstrong revealed the company’s complicated communication process with the SEC regarding the new lending product that the company has planned to launch later this year. According to the thread on the Coinbase CEO’s Twitter account, the SEC is unclear about the legal guidelines.
Since the SEC is pursuing BlockFi, it cannot reveal the real reason behind Coinbase’s restriction of activity in the DeFi industry. According to Coinbase, the SEC has also required the company to disclose all potential customer data to operate legally in the country. To do that, Coinbase will have to make KYC mandatory for all of its users across current and future platforms and products.
BlockFi is also a financial services company developing various cryptocurrency investment solutions for private investors like interest-earning accounts, crypto-backed USD loans, and non-existent fee trading. According to the company’s website, BlockFi is looking forward to working with U.S. regulators and laws.
But most likely, according to Evan, the commissioners are still acting like regulators who are unwilling to understand what and why they tax or prohibit. In the past, the SEC has linked centralized lending and perpetual futures with unreasonably high leverage options to the DeFi industry, which clearly shows the uncertainty of the commission in terms of regulating the industry.
- The SEC Had Threatened To Sue The Coinbase Exchange Over A Lending Feature
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