Also, is Coinbase saying Lend isn't an investment contract? It sure sounds like one to me. Lend my crypto to Coinbase and I get a 4% return? I like the idea but it sure sounds like an investment contract to me.
I don’t see the difference at all between a USD that makes (pitiful) interest in a bank savings account and a peg to USD that makes awesome interest in a Coinbase savings account. When I invest my USD with Wells Fargo bank they are converted to Wells Fargo Bucks that are tied to how efficient and generous the bank is (they aren’t) and my interest received is tied to that common enterprise. Those Wells Fargo Bucks aren’t classified as securities. The $1 portion will always be $1.
No one invests in Tether or USD hoping their investment increases in value, that is absurd. It’s always a $1, so it is always losing value unfortunately.
- Offer it as a bank, while complying with the regulations for being a bank, OR
- Offer it as a security, while complying with the regulations for offering securities.
My read on this blog post is that Coinbase is trying to get out of the securities option by kinda pretending to be the banking option, but without actually complying with or falling under the jurisdiction of banking regulations. Is that about right?
Bank accounts count as a security. But they are regulated more tightly by bank-account rules, so they are exempt from the less stringent Security rules.
Meanwhile Coinbase is much free-er to do with your money as they like. If they play it too risky and go bankrupt, that is your money gone. To offset this risk, securities law requires they register as a security and make the required disclosures and limit speculative statements etc.
So "banks can't compete on interest" is maybe true, but not a fair comparison since banks also have to be much more careful with your money.