There has been another wave of regulation buzz this week as Coinbase took the offensive and called out the SEC. Coinbase CEO Brian Armstrong took to Twitter to identify a pattern of “sketchy” behavior he’s experienced directed toward Coinbase. Here’s the story, according to Brian: the company was planning to roll out a feature called Lend, which would allow users to lend their cryptocurrency for a return. This is a common feature in the crypto world, with most major wallets and exchanges offering it natively. When Coinbase made the SEC aware that they will be releasing the feature, the SEC responded by declaring that crypto lending is considered a security.
Coinbase executives requested further explanation and in response, the SEC subpoenaed documents from Coinbase, demanded testimony from their employees, and informed the company they will be sued if Coinbase proceeds to launch their Lend feature. Armstrong went on to explain that the new head of the SEC had previously dodged an attempt to introduce himself to regulators on a May trip to DC, being told “we’re not meeting with any crypto companies.” In Coinbase’s official posted statement, they reveal that the SEC requested the name and contact information for everyone on their Lend waitlist, which the company refused to give.
Mark Cuban posted his take in response to Armstrong’s tweets, calling this “Regulation via Litigation”, stating that the SEC is struggling to set reasonable regulation and is instead planning to leave it to the lawyers.
TLDR: The SEC has officially stated it plans to sue Coinbase if they release their lending feature, a feature many other exchanges already offer.