Here’s why Coinbase is in hot water over crypto lending — and how the SEC is sending a shot across the bow for DeFi

 Here’s why Coinbase is in hot water over crypto lending — and how the SEC is sending a shot across the bow for DeFi

Coinbase Global finds itself in a dust-up with its top regulator over lending practices that the Securities and Exchange Commission says run afoul of existing securities rules.

Brian Armstrong, the outspoken chief executive of Coinbase
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late Tuesday disclosed that the crypto platform is being investigated over a lending program that allows customers holding Circle’s USD stablecoin — an asset intended to serve as a digital dollar — to earn interest of around 4% APY, by lending it to Coinbase, which in turn lends it to traders.

Crypto experts and financial specialists explained to MarketWatch that the legal dispute could be one that establishes clearer rules for the burgeoning segment of the digital-asset market known as decentralized finance, or DeFi, where investors lend out digital coins to earn additional fee income.

Also read: What is decentralized finance? An expert on bitcoins…

Read full article at www.marketwatch.com