Coinbase ditches plans for crypto-lending service, signs deal with US Homeland Security department
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US-based crypto exchange giant Coinbase has confirmed it will not be pursuing its proposed crypto-lending service.
In an update to its June blog posting that announced the program, Coinbase alluded to a lack of present regulatory clarity for the US crypto industry.
“As we continue our work to seek regulatory clarity for the crypto industry as a whole,” reads the recent statement, “we’ve made the difficult decision not to launch the USDC APY program… We have also discontinued the waitlist for this program as we turn our work to what comes next.”
According to the exchange, hundreds of thousands of US customers had signed up for Lend, a service that was aiming to provide at least 4 per cent APY on deposits of the popular stablecoin USDC.
Coinbase’s about-face comes on the back of mounting pressure from the US Securities and Exchange Commission (SEC), which threatened Coinbase with legal action if the lending service was launched.
The SEC has made it clear it would deem the Lend offering as a an illegal, unregistered security.
In news that’s more positive for the US exchange today (but perhaps not for fans of crypto privacy), Coinbase has signed a significant deal with the US Department of Homeland Security’s Immigration and Customs Enforcement (ICE) branch.
The three-year contract will see the US government department pay the exchange up to US$1.36 million for a license to use Coinbase’s analytics software – presumably in order to gain more knowledge about US citizens’ crypto usage.
The deal with ICE is the latest in a series of contracts between Coinbase and the US government. This latest contract is by far the largest, however, and will see the exchange deliver “application development software as a service” to the government body.
It’s not a partnership that’s been met with particular enthusiasm from various sections of the freedom and privacy-loving crypto community, however, according to Cointelegraph.
Human Rights Foundation chief strategy officer Alex Gladstein, for instance, has questioned the motives of the partnership in a series of tweets…
Like, this isn’t very much money for Coinbase in the grand scheme of things.
Strange that they would risk so much reputationally for such a relatively small sum.
— Alex Gladstein 🌋 ⚡ (@gladstein) September 18, 2021
… as have others…
Avoid using centralized crypto exchanges.
They pose a significant risk for your privacy.
There are decentralized alternatives, atomic swaps, and trusted crypto-friendly communities.
U.S. Homeland Security Signs $1.36M Contract with Coinbase – Decrypt https://t.co/zDEEiXOHau
— Pavol Lupták (@wilderko) September 20, 2021
It’s not clear at this stage, however, what data ICE will be gleaning from Coinbase Analytics – the exchange’s blockchain forensic tool – and for what purpose.