Coinbase COO confirms company will roll out crypto regulation proposals

Selina Johansson

Monitors display Coinbase signage during the company’s initial public offering (IPO) at the Nasdaq market site April 14, 2021 in New York City. Coinbase Global Inc. is the largest U.S. cryptocurrency exchange, debuting today through a rare direct listing. (Photo by Robert Nickelsberg/Getty Images)

Coinbase’s (COIN) top executives confirmed it plans to publish a regulatory framework for policy makers in the U.S. in the coming weeks. Speaking at the DeFi-focused Mainnet conference, Coinbase President and Chief Operating Officer Emilie Choi broadly addressed the company’s current position on crypto regulation.

The announcement comes two weeks after Coinbase CEO Brian Armstrong voiced objections on Twitter to the Securities and Exchange Commission’s moves against the company. 

“We should all care about transparency and clarity. The reason we went out with that tweet storm is because we didn’t feel like there was transparency and clarity to the way things were being regulated,” said Choi. 

“We are regulated by more than 50 different regulators and we can handle it, if we’re struggling with this what is your audience going to do,” said Choi referring to other cryptocurrency companies in attendance of the conference.

“We just want to make sure there’s an even playing field for crypto companies,” said Choi referring to how crypto services are regulated differently than traditional financial services.

The interview follows a day after rumors circulated over Twitter saying that Coinbase wasn’t done opposing the SEC’s move to block its crypto lending product, Coinbase Lend. A Coinbase representative told Yahoo Finance this week that those rumors weren’t accurate. 

“We do have regulatory proposals we will be publishing in the coming weeks. They will focus on what the future of crypto regulation should look like,” said the spokesperson. 

The Coinbase Lend proposal would offer users a 4% annual percentage yield (APY) for lending USD coin (USDC) — a stablecoin pegged to the U.S. dollar — a lower yield than what other crypto lending businesses offer, according to what Armstrong said on Twitter. However, the SEC threatened to sue Coinbase if it offered the product because it classified the product as a security. 

Coinbase’s chief wasn’t alone in taking issue with regulators. Other crypto market players have publicly expressed frustration with the SEC, which is also reportedly probing the popular decentralized finance (DeFi) platform UniSwap.

On Sept. 17, Coinbase confirmed it is suspending the launch of Lend indefinitely

“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 announced below,” Coinbase wrote on the company’s blog.

NEW YORK, NY - MAY 15:  Coinbase Founder and CEO Brian Armstrong attends Consensus 2019 at the Hilton Midtown on May 15, 2019 in New York City.  (Photo by Steven Ferdman/Getty Images)

Coinbase Founder and CEO Brian Armstrong attends Consensus 2019 at the Hilton Midtown on May 15, 2019 in New York City. (Photo by Steven Ferdman/Getty Images)

That same day, state regulators in Texas and New Jersey filed motions to block another crypto lending platform, Celsius Network, from offering its product to residents within their states.

Given Coinbase’s size as one of the world’s largest crypto exchanges, the decision not to move forward with its lending product suggests other companies may follow suit in working with the SEC. The fact that Coinbase is proposing a crypto regulatory framework to policymakers shows there’s more going on behind the scenes, but it plans to work within the U.S. legal system.

Coinbase shares traded at $241 on Wednesday, down 26% from its April 14 IPO price. 

David Hollerith is a senior reporter covering the cryptocurrency and stock markets. You can follow him @DsHollers.

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