On Wednesday, Coinbase, one of the leading crypto exchanges, was given a warning from the US Securities and Exchange Commission (SEC). The regulator threatens to sue the company if it does not halt its yield-generating product, Coinbase Land. The product would allow users to get an annual 4% rate from their digital assets. The SEC issued a warning as soon as Coinbase announced the launch of the service that offers clients higher interest rates compared with federal banks. The regulator is concerned that the product would be qualified as a security.
If the company does not halt the implementation of Coinbase Lend, the supervisory authority promises to take coercive measures as punishment. Moreover, the SEC told the crypto exchange to write a written defense of its new product. At the same time, the watchdog said the company should provide it with contacts of all clients that expect the launch of the service. However, Coinbase refused to do so.
Despite the fact that the SEC's decision came unexpectedly, the crypto exchange shifted the launch date to October. Later, Coinbase CEO Brian Armstrong said that the regulator refused to meet with him.
Coinbase is not the only company scrutinized by the regulator. The SEC has recently filed an action against BlockFi Lending. Last Friday, it also launched an investigation into Uniswap Labs, the developer of Uniswap, one of the largest decentralized crypto exchanges. Uniswap clients can exchange tokens on the Ethereum blockchain without using central limit order books.
The SEC keeps collecting information about various decentralized finance players, following China's suit. In early August, SEC Chair Gary Gensler said that the regulator needs more authority to protect participants in the cryptocurrency market. Gensler believes that the government should pass a law giving the agency the legal authority to monitor crypto exchanges.
According to experts, bitcoin may plunge below the $20K mark under the pressure of the US authorities. The value of digital gold has recently been directly related to the turmoil in the cryptocurrency market. Apart from that, the cryptocurrency market is mostly represented by retail investors who are inclined to react swiftly to BTC's volatility.
