Mark Cuban has sided with Coinbase in the exchange’s brewing legal saga with the US Securities and Exchange Commission (SEC).
Unsurprisingly, the Dallas Mavericks owner did not side with the regulator, urging the crypto exchange to stand its ground instead.
Cuban has appealed to Coinbase to “go on the offensive” after the regulator cautioned Coinbase not to launch a crypto lending product that it said would be treated as unregistered security.
“Brian, this is Regulation via Litigation”, Cuban said, addressing Coinbase CEO and founder Brian Armstrong who had tweeted about the company's confrontation with the regulator.
Armstrong was frustrated that SEC had not provided any guidelines for Coinbase to follow and pointed out that similar products were already available, but that SEC did not consider those unregistered securities.
“They aren't capable of working through this themselves and are afraid of making mistakes in doing so. They leave it to the lawyers. Just the people you don't want impacting the new technologies. You have to go on the offensive”, Cuban chimed in.
Coinbase has been trying to get a lending product approved and push through regulators, but this is the first time Armstrong has publicly expressed his frustration with the regulatory rigidity.
Coinbase Lend was announced in June as an in-development feature that will eventually allow USDC stablecoin holders to generate a 4% return on their savings.
While Coinbase's frustration is understandable, under US law products offering a yield are considered securities and would have to be treated as such.
Blockfi, a rival to Coinbase, already offers them, but this has led to a cease and desist letter from five states related to BlockFi Interest Accounts.
Cuban failed to specify what his “go on the offensive” would mean since similar products have already been hit with regulatory action.