{"id":49069,"date":"2021-09-08T11:19:17","date_gmt":"2021-09-08T08:19:17","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=49069"},"modified":"2025-09-02T10:47:56","modified_gmt":"2025-09-02T07:47:56","slug":"sec-threatens-coinbase-with-lawsuit-over-planned-crypto-savings-accounts","status":"publish","type":"post","link":"https:\/\/u1f987.com\/en\/sec-threatens-coinbase-with-lawsuit-over-planned-crypto-savings-accounts\/","title":{"rendered":"SEC threatens Coinbase with lawsuit over planned crypto-savings accounts"},"content":{"rendered":"<p>The U.S. Securities and Exchange Commission (SEC) warned the cryptocurrency exchange Coinbase of potential legal action if it launches crypto-savings accounts based on USD Coin (USDC) yielding 4% annually, over their treatment as \u201csecurities.\u201d<\/p>\n<blockquote class=\\\"twitter-tweet\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">After months of trying to engage with the <a href=\\\"https:\/\/twitter.com\/SECGov?ref_src=twsrc%5Etfw\\\">@SECGov<\/a> on our planned Coinbase Lend product, we recently received notice that it intends to pursue legal action against us. We believe dialogue is at the heart of good regulation, even if the SEC may not. <a href=\\\"https:\/\/t.co\/OumvyTPQdj\\\">https:\/\/t.co\/OumvyTPQdj<\/a><\/p>\n<p>\u2014 Coinbase (@coinbase) <a href=\\\"https:\/\/twitter.com\/coinbase\/status\/1435448395091615747?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<p>Coinbase <a href=\\\"https:\/\/blog.coinbase.com\/sign-up-to-earn-4-apy-on-usd-coin-with-coinbase-cdad79e5f5eb\\\">\u0430\u043d\u043e\u043d\u0441\u0438\u0440\u043e\u0432\u0430\u043b\u0430<\/a> Lend in June. The product offers higher interest rates than those offered by traditional banks. As a substitute for <span data-descr=\\\"Federal Deposit Insurance Corporation\\\" class=\\\"old_tooltip\\\">FDIC<\/span> insurance on such accounts, the exchange offered a \u201cpeace of mind\u201d guarantee.<\/p>\n<p>According to Coinbase general counsel Paul Grewal, Coinbase has actively engaged with the SEC about the Lend product over the past six months. Last week the regulator warned of legal action should the product launch proceed.<\/p>\n<p>The top executive noted that similar products have been on the market for many years, with some appearing as recently as August. Coinbase decided to seek regulator&#8217;s approval and postpone the launch.<\/p>\n<p>The lawyer explained that interpreting Lend as a \u201csecurity\u201d is erroneous. Coinbase customers will not \u201cinvest\u201d in the program; they will act as lenders through the USDC deposited on the platform. The exchange commits to paying interest regardless of its operating performance, guaranteeing conversion of USDC to fiat on demand.<\/p>\n<p>After reviewing documents and interviewing staff, officials offered no explanation for why they view Lend as a \u201csecurity.\u201d According to Grewal, the Commission provided no arguments and after threatening to sue if the savings accounts were launched, merely cited the Howey and Reves tests as justification for its decision.<\/p>\n<p>Grewal urged the regulator to provide regulatory clarity and to engage in dialogue, with the exchange remaining open. He said Lend would be postponed at least until October, and clients would be kept informed at each step as developments unfold.<\/p>\n<blockquote class=\\\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\\\">\n<p><em>\u201cThey don\u2019t tell us why they think it\u2019s a security. Instead they request a pile of documents (we comply), demand testimony from our employees (we comply), and then tell us they will sue us if we proceed, without explanation as to why.\u201d<\/em>, \u2014 Coinbase CEO Brian Armstrong.<\/p>\n<\/blockquote>\n<blockquote class=\\\"twitter-tweet\\\" data-conversation=\\\"none\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">6\/ They refuse to tell us why they think it\u2019s 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.<\/p>\n<p>\u2014 Brian Armstrong (@brian_armstrong) <a href=\\\"https:\/\/twitter.com\/brian_armstrong\/status\/1435439621190471683?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<p>Armstrong said the SEC refused to meet, despite Coinbase achieving <a href=\"https:\/\/u1f987.com\/en\/news\/coinbase-shares-begin-trading-on-nasdaq-market-capitalisation-tops-100bn\">public status<\/a>. Instead of presenting a clear position and guidance for participants in the industry on such products, the Commission uses intimidation tactics behind closed doors. This looks more like a land grab than regulation, he added.<\/p>\n<blockquote class=\\\"twitter-tweet\\\" data-conversation=\\\"none\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">8\/ But in this case they are refusing to offer any opinion in writing to the industry on what should be allowed and why, and instead are engaging in intimidation tactics behind closed doors. Whatever their theory is here, it feels like a reach\/land grab vs other regulators.<\/p>\n<p>\u2014 Brian Armstrong (@brian_armstrong) <a href=\\\"https:\/\/twitter.com\/brian_armstrong\/status\/1435439925172731914?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<p>Armstrong recalled Gary Gensler&#8217;s calls for transparency in the industry and urged the regulator to articulate in writing its position on banning such products, if that is indeed the case. He believes that such an approach should apply to all participants in the industry.<\/p>\n<blockquote class=\\\"twitter-tweet\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">11\/ If you don\u2019t want this activity, then simply publish your position, in writing, and enforce it evenly across the industry.<\/p>\n<p>\u2014 Brian Armstrong (@brian_armstrong) <a href=\\\"https:\/\/twitter.com\/brian_armstrong\/status\/1435440114801340421?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<p>Nastaiv na zashchite potrebitelyev i \u00abchestnykh usloviyakh\u00bb konkurentsii, po slovam CEO Coinbase, Komissiya dobivaetsya obratnogo, ne pozvolaya Coinbase zapustit&#8217; sushchestvuushiy na rynke produkt.<\/p>\n<blockquote class=\\\"twitter-tweet\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">13\/ Shutting these down would arguably be harming consumers more than protecting them, and by preventing Coinbase from launching the same thing that other companies already have live, they\u2019re creating an unfair market.<\/p>\n<p>\u2014 Brian Armstrong (@brian_armstrong) <a href=\\\"https:\/\/twitter.com\/brian_armstrong\/status\/1435440449502605313?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<p>In conclusion, Armstrong urged the SEC to change its approach and provide regulatory clarity. He said litigation should be a last resort for the regulator.<\/p>\n<blockquote class=\\\"twitter-tweet\\\">\n<p lang=\\\"en\\\" dir=\\\"ltr\\\">21\/ Our door remains open. Hopefully the SEC steps up to create the clarity this industry deserves, without harming consumers and companies in the process. America could really use us all working together to figure this out right now.<\/p>\n<p>\u2014 Brian Armstrong (@brian_armstrong) <a href=\\\"https:\/\/twitter.com\/brian_armstrong\/status\/1435440998054653959?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<blockquote class=\\\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\\\">\n<p><em>\u201cWelcome to the party\u201d<\/em>, greeted Ripple CEO Brad Garlinghouse Armstrong.<\/p>\n<\/blockquote>\n<blockquote class=\\\"twitter-tweet\\\" data-conversation=\\\"none\\\">\n<p lang=\\\"und\\\" dir=\\\"ltr\\\"><a href=\\\"https:\/\/t.co\/8NupQPMBaT\\\">https:\/\/t.co\/8NupQPMBaT<\/a> <a href=\\\"https:\/\/t.co\/SO5QDqdrMY\\\">pic.twitter.com\/SO5QDqdrMY<\/a><\/p>\n<p>\u2014 Brad Garlinghouse (@bgarlinghouse) <a href=\\\"https:\/\/twitter.com\/bgarlinghouse\/status\/1435461446544945157?ref_src=twsrc%5Etfw\\\">September 8, 2021<\/a><\/p><\/blockquote>\n<p> <script async=\\\"\\\" src=\\\"https:\/\/platform.twitter.com\/widgets.js\\\" charset=\\\"utf-8\\\"><\/script><\/p>\n<p>Back in December 2020, the SEC charged Ripple and its executives with <a href=\"https:\/\/u1f987.com\/en\/news\/sec-files-suit-against-ripple\">unregistered sale of securities<\/a> under the guise of XRP tokens worth $1.3 billion. The regulator later amended the suit, focusing on the actions of <a href=\"https:\/\/u1f987.com\/en\/news\/sec-clarifies-brad-garlinghouses-liability-in-ripple-lawsuit\">Brad Garlinghouse and Chris Larsen<\/a>.<\/p>\n<p>In September 2021, the BlockFi crypto-lending platform said the New Jersey Bureau of Securities would push back the effective date of the prohibition on the firm opening new <span data-descr=\\\"BlockFi Interest Account\\\" class=\\\"old_tooltip\\\">BIA<\/span> accounts for state residents from September 2 to September 30.<\/p>\n<p>Similar claims against BlockFi were also brought by regulators in <a href=\"https:\/\/u1f987.com\/en\/news\/alabama-regulator-accuses-blockfi-of-selling-unregistered-securities\">Alabama<\/a>, Texas and <a href=\"https:\/\/u1f987.com\/en\/news\/vermont-regulators-launch-probe-into-blockfis-activities\">Vermont<\/a>.<\/p>\n<p>Subscribe to ForkLog news on <a href=\\\"https:\/\/www.facebook.com\/forklog\\\" target=\\\"_blank\\\" rel=\\\"nofollow noopener\\\">Facebook<\/a>!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The U.S. Securities and Exchange Commission (SEC) warned the cryptocurrency exchange Coinbase of potential legal action if it launches crypto-savings accounts based on USD Coin (USDC) yielding 4% annually, over their treatment as \u201csecurities.\u201d<\/p>\n","protected":false},"author":1,"featured_media":49070,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[3],"tags":[138,1097,36,128,26],"class_list":["post-49069","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news-and-analysis","tag-coinbase","tag-lending","tag-regulation","tag-sec","tag-usa"],"aioseo_notices":[],"amp_enabled":true,"views":"17","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/49069","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/comments?post=49069"}],"version-history":[{"count":1,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/49069\/revisions"}],"predecessor-version":[{"id":49071,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/posts\/49069\/revisions\/49071"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media\/49070"}],"wp:attachment":[{"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/media?parent=49069"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/categories?post=49069"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/u1f987.com\/en\/wp-json\/wp\/v2\/tags?post=49069"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}