Coinbase canceled the launch of a program that would have allowed customers to earn interest by lending USD Coin, a dollar-based stablecoin created by the company, to Coinbase. Coinbase's decision follows the reported threat by the SEC to bring an enforcement action (see previous coverage) should Coinbase follow through with the launch. Coinbase also clarified that it ended its waitlist for the program.
Commentary
The Coinbase program was clearly the offering of a Coinbase debt security to retail investors without registration under the Securities Act. While the SEC may not have been as transparent as it should have in the reasoning for its determination that the program involved securities, the legal status of the program was not really a close call (see prior commentary). Thus, creators of digital asset products should not assume, based on this case, that the SEC will necessarily deem their products to be securities. While there is little doubt of SEC Chair Gary Gensler's general skepticism of digital assets, this event is not as significant as the publicity surrounding it makes it out to be.
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