Coinbase shares fall as Lend programme gets shelved
19:06, 20 September 2021
Shares in cryptocurrency exchange platform Coinbase fell by around 5% Monday after the newly public company said it would cancel plans to launch a lending programme amid warnings of possible legal action by the US Securities and Exchange Commission (SEC).
The company is trading around $234 (£171.34) per share on Monday, down from Friday’s close of $245 and nearly half the peak price of $429 achieved when Coinbase debuted on the Nasdaq back in April.
Shares are also falling amid a more general sell-off in the crypto space as Bitcoin suffered a mini price crash over the weekend.
The original cryptocurrency fell around 7%. Although Coinbase is attempting to diversify its revenue streams, the company’s performance is still closely tied to the overall ups and downs of the crypto market, Moody’s noted in a report published last week.
High-yield savings
Back in June, Coinbase announced its Lend programme, which was supposed to be a kind of high-yield savings account that would pay customers a 4% annual percentage yield for holdings of USD Coin that can be exchanged one-to-one for a US dollar.
However, earlier this month Coinbase postponed the launch of the program after its CEO and co-founder Brian Armstrong fired off a thread of tweets detailing what he described as the “sketchy behaviour coming out of the SEC” that was derailing the programme.
The following day, chief legal officer Paul Grewal wrote a blog post providing more background on the company’s issue with the SEC. On Friday, Coinbase quietly updated its June blog post to announce that the Lend program is shelved.
In the online posts both Armstrong and Grewal note that other companies have launched crypto lending programmes. They claim Coinbase is being singled out with a Wells notice, which says the SEC plans to sue the company in court should the Lend programme launch.
Other companies offering crypto lending programs include BlockFi, Binance, LendaBit and YouHodler.
Regulatory scrutiny
The crypto industry has come under regulatory scrutinity in recent weeks. SEC chair Gary Genseler appeared last week before the Senate Committee on Banking, Housing and Urban Affairs with a focus on the sector.
Gensler called cryptocurrencies the “wild west” and vowed to crackdown on the industry and protect investors through existing regulations and to identify cracks in the system that need filled.
“Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending,” he told the Senate committee last week. “This asset class is rife with fraud, scams, and abuse in certain applications. We can do better.”
Read more: Coinbase earnings blow past estimates
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