Coinbase Cancels Plans to Launch Lending Program

Crypto exchange claimed the SEC had threatened to sue them if it went ahead with the lending service.

article-image

Source: Shutterstock

share

key takeaways

  • The program would have allowed eligible customers to earn 4% annual percentage yield on USD Coin (USDC)
  • “We will not stop looking for ways to bring innovative, trusted programs and products,” Coinbase stated in a blog, noting that hundreds of thousands of customers had signed up for the planned offering

Coinbase is putting on hold its plans to launch a lending program that would provide users the ability to earn interest on lended assets after reportedly facing pressure from US regulators.

The company said in a blog post on Friday that it was making “the difficult decision” not to launch the initiative, which would have allowed eligible customers to earn interest on select assets on Coinbase, starting with 4% annual percentage yield, or APY, on USD Coin (USDC). Coinbase has also discontinued the waitlist for this program.

“We had hundreds of thousands of customers from across the country sign up and we want to thank you all for your interest,” the Sept. 17 Coinbase blog states. “We will not stop looking for ways to bring innovative, trusted programs and products to our customers.”

A spokesperson for Coinbase declined to comment further.  

Coinbase had revealed plans for the program in a June blog post. The company wrote at the time that the national average for a traditional savings account hovers around 0.07%, with high-yield savings accounts falling short of even 1%. Thus by lending to Coinbase USDC, a stablecoin that can always be redeemed one-to-one for $1, users can earn eight times the national average of high-yield savings accounts, the post added.

Paul Grewal, Coinbase’s chief legal officer, said in a Sept. 7 blog that the SEC sent the company a Wells notice, which he noted is the official way a regulator tells a company that it intends to sue. The SEC told Coinbase they consider Lend to involve a security, he added, but refused to share details on why or how they’d reached that conclusion.

An SEC representative declined to comment on Coinbase’s previous intention to launch the lending service or its latest plans to cancel them. 

“We could have simply launched the product but we chose not to,” Grewal wrote at the time. “This is far from the norm in our industry. Other crypto companies have had lending products on the market for years, and new lending products continue to launch as recently as last month.”

Crypto exchange Gemini currently offers Gemini Earn, a lending program through which users can lend their crypto to certain institutional borrowers and earn interest.

Matthew Gould, founder and CEO of Unstoppable Domains, told Blockworks that Coinbase withdrawing these plans is just the latest example of how lack of regulatory clarity in the US is slowing innovation and preventing consumers from accessing new and useful products. 

New Jersey, Alabama and Texas each filed complaints in July alleging that New Jersey-based BlockFi was offering unregistered securities to clients through its high-yield interest account service. BlockFi has argued that the product is not a security.

“My hope is that government leaders are listening to the industry and will respond with a more transparent approach to the crypto sector,” he said. “The first rule of regulation needs to be ‘do no harm to consumers.’ Right now it feels like regulators are instead pursuing a ‘stop everything while we figure this out’ approach without clearly communicating their needs.”


Are you a UK or EU reader that can’t get enough investor-focused content on digital assets?Join us in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket. Buy it now.


Tags

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

recent research

Research Report Templates.png

Research

An overview of the Base Ecosystem, with a focus on market leaders.

article-image

Although bitcoin hitting $120k by year’s end is looking unlikely

article-image

About 270 million HYPE has been claimed, valued around $7.6 billion

article-image

Stanford professors David Mazières and Dan Boneh will lead the lab alongside a cohort of graduate student researchers

article-image

With more companies holding BTC, bitcoin yielding strategies could become “a new corporate finance norm,” CoinShares posed

article-image

The proposal comes after Polygon governance considered a controversial use of bridged liquidity for yield

article-image

Can the community balance its decentralized ethos with the need for inclusivity and constructive debate?