Coinbase abandons crypto-savings accounts plan after SEC threat

Bitcoin exchange Coinbase has abandoned plans to launch crypto-savings accounts based on USD Coin (USDC) at 4% APY after a threat of a lawsuit from the SEC. As disclosed in the company’s blog.

“Continuing our work toward regulatory clarity for the crypto industry as a whole, we have made the hard decision not to proceed,” Coinbase said.

The exchange announced the Lend product in June. It offers higher interest rates than traditional banks. The company said it had actively engaged with the regulator regarding the product’s launch over the past six months.

However in September the SEC warned the bitcoin exchange of legal action if it launches crypto-savings accounts due to their classification as ‘securities’. The company stressed that the Commission never explained why it views Lend as such.

Brad Garlinghouse, CEO of Ripple, supported Coinbase. In his view, the regulator’s warning has put the trading platform in a situation similar to his company.

On September 16, Coinbase filed an application to register as a futures commission merchant. In the future, the move could enable the bitcoin exchange to obtain a license from the CFTC.

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