  The biggest crypto news and ideas of the day Sept. 8, 2021 Sponsored by  Welcome to The Node.
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Today's must-reads Top Shelf  SEC SHOCKS: Coinbase said the SEC has threatened to sue over the crypto exchange's yet-to-be-launched "Lend," a lending program for "verified borrowers" that offers 4% annualized yields. In a blog post, the company said the federal regulatory won't provide an explanation over how or why the program might fall afoul of securities law. Coinbase's stock ($COIN) slid 4.1% on Nasdaq to $256 ahead of press time. LARGEST ASSET MANAGER: BlackRock will use Axoni's Veris blockchain to manage equity swap trades, said a statement by Axoni, joining Citi and Goldman Sachs, among others, on the network. Using Veris, parties can match and confirm trade terms upfront, and match and reconcile post-trade data after a stock swap. MINING BTC: Oslo-based Arcane Crypto, known mostly for its regulated securities products, ordered its first batch of Antminers to start mining crypto this quarter. Company CEO Torbjørn Bull Jenssen expects the batch to bring in around SEK 3.5 million ($407,000) of revenue per month, he said in the statement. VENTURE FUN: Crypto-focused private equity firm 10T has raised $750 million from a mix of public pension plans, endowments, foundations and family offices investing in mid-to-late-stage companies in the digital asset ecosystem. 10T, led by CEO and managing partner Dan Tapiero, has closed its inaugural growth equity funds – 10T Fund and 10T DAE Expansion Fund – with nearly $389 million in capital commitments.
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Overheard on CoinDesk TV... Sound Bites  "We have constant dialogue and we're continuously evaluating all new ideas in partnership with them to get clarity not just for Coinbase but for the industry to innovate and thrive."
–Coinbase VP for Products Sanchan Saxena, on recent warnings by the SEC, on CoinDesk TV's "First Mover."
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Putting the news in perspective The Takeaway  Does Gensler Want Dialogue or Just a Monologue? Coinbase, the largest U.S. cryptocurrency exchange and one of the largest publicly traded cryptocurrency firms in the world, announced late Tuesday night that it has received a warning from the Securities and Exchange about its planned Lend product, which would give users 4% interest on deposits of the stablecoin USDC, with other assets apparently to be added later. According to Coinbase, the U.S. regulatory agency last Wednesday sent the firm what's known as a Wells notice, a warning of a planned lawsuit over the product. (Disclosure: Coinbase's parent company, Digital Currency Group, is an investor in Circle, which issues USDC). But, according to Coinbase, the warning, which will likely block the launch of the Lend product, was issued after months of borderline stonewalling by the regulator. According to Coinbase CEO Brian Armstrong, the stonewalling extended back to at least May, when he visited Washington, D.C., to meet with various lawmakers and regulators. "The SEC was the only regulator that refused to meet with me, saying 'we're not meeting with any crypto companies,'" Armstrong wrote in a Twitter thread last night. According to a blog post from Coinbase, the company presented the Lend product to the SEC and engaged in a long disclosure process before last week's warning. Despite that effort at transparency, Armstrong says the SEC did not respond with any advice on how to properly structure the product ahead of issuing its Wells warning.
"We're being threatened with legal action before a single bit of actual guidance has been given to the industry on these products," Armstrong wrote. Coinbase argues, plausibly, that Lend is not a security, because its returns are not tied to the company's financial performance. Equally frustrating for the now-public startup is that similar products are widespread in the cryptosphere, offered by effectively unregulated entities including exchanges and DeFi protocols. Other U.S.-regulated crypto companies have responded with empathy and frustration. "U.S. regulators are beating down good actors because it's convenient," wrote Jesse Powell, CEO of the Kraken crypto exchange. "Meanwhile, actual scams run unabated for years." Armstrong also questioned whether the SEC is really doing its job. "Who are they protecting here and where is the harm? People seem pretty happy to be earning yield on these various products, across lots of other crypto companies … Shutting these down would arguably be harming consumers more than protecting them."
–David Z. Morris
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Wednesday, September 8, 2021
SEC Threatens to Sue Coinbase
