Cryptocurrency holders have been earning yield by lending out their assets to various decentralized and centralized cryptocurrency exchanges. Coinbase recently announced that it would start offering 4% APY on USDC, its stable coin backed by USD.
SEC is now going after Coinbase telling them this lend feature would be a security. Lending has never been deemed security and many cryptocurrency exchanges are still offering this very feature.
SEC’s actual goal is to protect investors from scams. Lending does not seem to causing any harm. Instead, going against companies who lend products would cause harm to consumers.
SEC is now threatening that it would take legal action against Coinbase if it goes ahead with its lending feature.
This news was enough to bring price of bitcoin and other cryptocurrencies significantly, dropping bitcoin’s price from $52,000 to $43,000 in a single day. May be insiders knew what was coming?