Coinbase Backs Down From the SEC

(for those of you who missed yesterday’s newsletter, it also covered crypto regulation.)

Here’s what you need to know about crypto regulation on this Tuesday morning:

In an updated blog post, Coinbase announced its intention not to launch Lend, a product designed to offer interest to customers staking USDC on Coinbase.

“Our goal is to create great products for our customers and to advance our mission to increase economic freedom in the world,” the post reads. “As we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program.”

Less than two weeks ago, in a blog post, Coinbase’s Chief Legal Officer Paul Grewal said that the US Securities and Exchange Commission issued a Wells notice to Coinbase, signaling that the regulator would sue the exchange if Lend officially launched. According to Grewal, the SEC views the crypto interest-earning product as a security. The same day, Coinbase CEO Brian Armstrong called the SEC’s behavior “sketchy” in a tweet thread, railing against what he said was the SEC’s lack of clarity around crypto.

To conclude, Collins Belton, managing partner at Brookwood P.C., feels that, for Coinbase to publicly calling out the SEC right before canceling Lend was “strange.”

Shutting down Lend was not Coinbase’s only recent regulatory splash. On September 16th, Coinbase was awarded a three-year contract by the US Department of Homeland Security’s Immigration and Customs Enforcement (ICE) branch. The deal, which starts at $455,000 but could expand to $1.37 million, will provide ICE access to Coinbase’s blockchain analytics software.

Speaking of awarding contracts, the Internal Revenue Service has indicated an intent to track cross-chain transactions.

Messari’s Mainnet crypto conference got off to an eyebrow-raising start, as an attendee claimed that an event speaker was served by the SEC before taking the stage.

While neither the SEC nor Slava Rubin, the initial tweeter, have officially confirmed the rumor, Messari CEO Ryan Selkis appears to believe it to be true, though it is unclear whether he officially confirmed this.

In addition to Selkis, The Block reported yesterday that several attendees said they heard of multiple individuals being served at the event.