Brian Armstrong, co-founder, and CEO at Coinbase, expressed his concern over the sketchy behavior coming out of SEC recently.

He pointed to how several cryptocurrency holders were earning a yield on their assets over the past few years by lending out their funds and earning a return.  Several companies were offering such crypto lending versions.

When Coinbase decided to launch their own version of yield for investors, the SEC responded, stating that the lend feature is a security.  Coinbase felt strange on how a lend feature can be a security.

When the SEC was asked for clarifications to help understand their view, the SEC refused to tell why they think it is a security. Rather they subpoena a bunch of records from Coinbase.

SEC has also demanded testimony from Coinbase employees. Further stated that they will be suing Coinbase if they proceed to launch the yield product with zero explanation as to why.

Brian Armstrong expressed:  “Look.  We’re committed to following the law. Sometimes the law is unclear. So, if the SEC wants to publish guidance, we are also happy to follow that (it’s nice if you actually enforce it evenly across the industry equally btw).”

However, in this case, “They are refusing to offer any opinion in writing to the industry on what should be allowed and why, and instead are engaging in intimidation tactics behind closed doors. Whatever their theory is here, it feels like a reach/land grab vs. other regulators.”

Brian Armstrong is left wondering why plenty of other crypto companies continue to offer a lend feature, but Coinbase is somehow not allowed to.

He pointed to how Gensler in his confirmation hearing: “It’s important for the SEC to provide guidance and clarity,” Gensler said. “Sometimes that’s a clarity that will be a thumbs up, but even if it’s thumbs down, it’s important to provide that.” March 2, 2021.

If you don’t want this activity, then simply publish your position, in writing, and enforce it evenly across the industry.

It is true that the goal of the SEC is to protect investors from creating fair markets. So, who are they protecting here, and where is the harm? People seem pretty happy to be earning yield on these various products, across lots of other crypto companies.

Brain expressed that shutting these down would arguably be harming consumers more than protecting them. By preventing Coinbase from launching the same thing that other companies already have live, they’re creating an unfair market.

In May of this year, I traveled to DC to meet with every regulator and branch of government I could.  The SEC was the only regulator that refused to meet with me, saying, “we’re not meeting with any crypto companies.” This was right after we became the first crypto company to go public in the U.S.