With Securities and Exchange Commission (SEC) Chairman Gary Gensler steadfast in his belief that most digital asset are securities, it is reasonable to assume that the regulators affinity towards enforcement actions will continue for the foreseeable future. Over the past week, we saw Coinbase succumb to pressure by the SEC, prompting a fresh proposal expected to be put forth, and more.
Coinbase Lend Scrapped
Up until recently, lending services such as BlockFi and Celsius managed to attain great popularity while staying out of regulators crosshairs. No doubt, this prompted Coinbase to begin developing its own rival service known as ‘Coinbase Lend’.
Unfortunately for all, lending services find themselves in hot water at the moment, with the SEC viewing interest bearing accounts as being in violation of securities laws. This was most recently on display, when Coinbase was issued a warning by the SEC that it would sue the exchange if it proceeded with the launch of its ‘Lend’ service.
It now appears as though the aforementioned warning by the SEC was effective, with Coinbase indicating that it has decided to scrap its plans to launch the service entirely.
Moving forward, it should be interesting to see how existing lending services navigate these treacherous waters. Will others follow the lead of Coinbase and shutter their lending services? Or will they find a middle ground with the SEC?
Proposition by Coinbase
Despite the SEC claiming that regulations are clear-cut, company after company involved with digital assets states otherwise. In a move perhaps aimed at clearing up this disconnect, per CoinDesk, it is believed that Coinbase will be submitting a proposal to U.S. Federal officials in the coming days/weeks.
No doubt spurred in to action by the recent events surrounding the demise of its Lend service, this proposal is expected to take shape as a regulatory framework for overseeing digital assets.
Beyond securities violations, there is a rampant problem plaguing the digital assets sector – ransomware attacks. The United States Treasury Department is hoping to get a handle on the situation though, as made evident by its recent move to sanction the exchange known as ‘suex.io’.
This recent decision was made under the belief that suex.io is directly, and knowingly, responsible for laundering funds attained through ransomware attacks.
Thankfully for honest industry participants, the Treasury Department has at least recognized that not all cryptocurrency based activity is felonious.
“We recognize that the vast majority of activity that’s happening in the virtual currencies is legitimate activity, but we also do know that these criminals are using some of these exchanges and mixers and peer-to-peer services to conduct illicit activity that is not in our national interests,” – Deputy Treasury Secretary Adewale Adeyemo
While this may be the first exchange to officially be sanctioned, barring U.S. citizens from accessing its services, it will surely not be the last. Based on recent commentary from the U.S. Department of Justice, mixers and similar offerings may soon find themselves on the receiving end of sanctions similar to suex.io.