Crypto exchange Coinbase is set to propose a new regulatory guideline to U.S. federal officials.
According to people with knowledge of the matter, Coinbase is looking to unveil this proposition in the coming days.
Among other key issues, the crypto exchange plans to dispute what it believes should and should not be defined as a security within the U.S.
The news comes after Coinbase disclosed it was suspending plans to offer a new cryptocurrency lending product, which the U.S. Securities and Exchange Commission said would be a violation of securities policies.
The Wells Warning
Paul Grewal, Chief Legal Officer of Coinbase, and Chief Executive Officer Brian Armstrong revealed earlier this month that the SEC had issued a Wells Notice to the company, which said the regulator would file charges against the crypto exchange if it launches its “Lend” product.
Coinbase bowed to pressure from the SEC and scrapped plans to roll out its Lend product that would pay users interest for lending out their tokens.
The decision to shelve the product comes after the U.S. regulator threatened to sue the company if it pushed ahead with the launch.
Coinbase’s planned Lend program has become a flashpoint in deepening frictions between the SEC and the expanding crypto sector.
Regulatory clarity
“As we continue efforts to seek regulatory clarity for the crypto market as a whole, we have made the difficult decision not to launch,” Coinbase said in quotes by Fortune.
The U.S. regulator cited two Supreme Court precedents – the Howey and Reves cases – in contending Coinbase’s Lend product appeared to be in breach of U.S. securities laws.
In April, Coinbase valuation skyrocketed to almost $90 billion when the company went public through a direct listing on the NASDAQ just as bitcoin climbed to a record high.
Coinbase has a long history of attempting to establish frameworks to standardize how crypto exchanges approach digital currency listings and products, at least within the U.S.
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