Strike To Offer ‘No Fee’ Bitcoin Trading, Taking Aim At Coinbase And Square

Jack Mallers takes on Coinbase and its “asinine” trading fees. Strike To Offer ‘No Fee’ Bitcoin Trading, Taking Aim At Coinbase And Square

Payments platform Strike has announced that it will allow U.S. customers to buy and sell Bitcoin with almost no trading fees from today.

In an announcement on July 1, Strike founder and CEO Jack Mallers launched a salvo at leading U.S. cryptocurrency exchange Coinbase, stating that his platform will set out to be the “cheapest and easiest place on the planet to acquire BTC.”

The move also puts Strike in direct competition with Jack Dorsey’s Square and with PayPal, which started offering crypto assets within the platform to U.S. customers in November 2020.

The announcement stated that the firm has launched the “Bitcoin Tab” enabling the ability to buy Bitcoin on Strike with “no fee outside of the market spread.”

The Chicago-based payments firm stated that it would charge a maximum “execution cost” of around 0.3% for brokering BTC trades, looking to drop that to below 0.1% over the coming months as volume grows.

Popular trading app Robinhood also offers commission-free crypto trading in select states. More than 6 million new customers bought crypto on the platform within the first two months of 2021.

Mallers is taking aim directly at Coinbase with the move, labeling its excessive trading fees as “asinine”. He pointed out that Coinbase made $1.8 billion in revenue in the first quarter of 2021, with $771 million in profit, 94% of which coming from fees as high as 3%.

He was highly critical of the exchange’s free giveaways which award users with a couple of dollars worth of altcoins for watching videos.

“Make no mistake, when you buy Bitcoin on Coinbase, you are supporting shitcoins.”

There was also a dig at PayPal which he stated has also recently hiked fees across the board, and now charge sellers 3.49% + $0.49 to process crypto transactions.

Mallers added that the aim is to drive prices in the market as close to nothing as possible, which would be in keeping with Bitcoin’s ethos.

“Our mission is to secure financial freedom for all, and we won’t stop until we do so for all 8 billion people on the planet.”

As reported by Cointelegraph, Strike has entered into a partnership with the El Salvador government to assist with its Bitcoin adoption rollout.

Updated: 8-7-2021

SEC Threatened To Sue Coinbase Over Lending Product, CEO Says

The securities regulator is threatening to sue Coinbase should the exchange launch its Lend product, Brian Armstrong claimed in a Twitter thread.

U.S.-based cryptocurrency exchange Coinbase says the Securities and Exchange Commission (SEC) has threatened to sue over its yet-to-be-launched “Lend” program.

Coinbase said it had been in discussions with the SEC over its program for almost six months. Despite these ongoing discussions, Coinbase says the SEC issued a “Wells Notice,” according to a blog post on Tuesday.

A Wells Notice or letter is the U.S. regulator’s formal way of announcing it may bring charges against companies or employees.

Coinbase says the SEC won’t explain its issue with the Lend program.

“Rather, they have now told us that if we launch Lend they intend to sue,” according to the exchange’s post.

In a tweet thread on Tuesday, Coinbase CEO Brian Armstrong said his company had complied with all the SEC’s requests including providing subpoenaed records and testimony from employees.

Armstrong also said the agency gave no reasons for a potential lawsuit. He called the SEC’s classification of Lend as a security “strange.”

“How can lending be a security?” Armstrong tweeted.

Coinbase declined to comment further. A spokesperson for the SEC did not immediately return a request for comment.

SEC vs. Coinbase: Alex Mashinsky Says Celsius Will Have To ‘Wait And See’ On Fallout

The Celsius CEO is also seeking clarity for similar products, while Mark Cuban advises going on the offensive.

Support for Coinbase and its CEO, Brian Armstrong, has been pouring in from the crypto community since the company disclosed in a regulatory filing on Wednesday that it had received a Wells Notice from the United States Securities and Exchange Commission.

The regulator has threatened to sue the exchange over its proposed Lend program, which would offer 4% interest on customer holdings of the USD Coin (USDC) stablecoin. Armstrong took to Twitter on Wednesday to vent his dismay over the lack of clarity from the regulator as to why it believes the product is a security. Meaival platforms Celsius and BlockFi offer similar products.

Speaking to Yahoo Finance on Wednesday, Celsius Network co-founder and CEO Alex Mashinsky said that everyone in the crypto industry was looking for clarity:

“I think we’re going through these murky waters right now and we need to get clarity and its going to take a little bit of time before we get the rules and we can start running faster.”

Mashinsky told Cointelegraph that Coinbase already provides yields on crypto assets such as Ether (ETH), so the SEC seems to have a particular issue with offering interest on USDC stablecoin deposits.

“The SEC claims yield on USDC may be a security if paid to non-accredited investors. Coinbase did not ask permission for all assets only for USDC.”

Celsius, which has more than $20 billion in assets under management, also pays yields on USDC and other stablecoins to non-accredited investors. However, Mashinsky said Celsius had pioneered the area, and its products “took a long time to perfect … it helps being the first to figure things out.”

When questioned about whether this means Celsius would be able to successfully navigate similar regulatory scrutiny to Coinbase, he replied:

“Everyone has to wait and see what the SEC will issue as regulation. Looks like Coinbase wants to take the SEC to court like XRP and prove they went beyond their charter.”

Billionaire investor and Dallas Mavericks owner Mark Cuban took to Twitter on Wednesday, advising Armstrong and Coinbase to “go on the offensive” and labeling the move as “Regulation via Litigation.”

Brian, this is “Regulation via Litigation”. They aren’t capable of working through this themselves and are afraid of making mistakes in doing so. They they leave it to the lawyers. Just the people you don’t want impacting the new technologies. You have to go on the offensive

— Mark Cuban (@mcuban) September 8, 2021

In a later tweet, he stated that by suing, the SEC “gets to play on their home court to regulate it,” adding that it could change how decentralized finance, or DeFi, works but also see it grow. Cuban urged Coinbase to be aggressive in its response to the threat of legal action for the greater good of the rest of the industry.

“It’s better for the industry that they take on the SEC rather than the SEC go after a small decentralized entity and get a quick judgment that becomes the law of the land for DeFi.”

Updated: 8-8-2021

Coinbase Has Words For The SEC. Is It Listening?

The crypto exchange says a surprise legal warning came after months of transparency about its lending plans.

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 Commission 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: CoinDesk’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, that began as early as 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 has since 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 formally 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.”

Armstrong is misdirecting here, at least slightly. The SEC is oriented towards protecting investors from risk, and whatever the returns on an unregulated crypto deposit product might be today, they are clearly very high risk on a longer timeline. Massive hacks of both DeFi products and exchanges remain disturbingly frequent, for instance.

Whenever you get interest, you’re essentially getting paid for your risk. And like it or not, in the current low-interest-rate environment, 4% interest on a stablecoin deposit implies substantial risk. With U.S. banks offering less than 1% on deposits and even 30-year Treasury yields under 2%, Coinbase’s offered rate certainly raises questions about where the premium is coming from.

In many of the DeFi “yield farming” programs Armstrong points to, for instance, supposed yield is actually paid in a platform’s native token. That makes most DeFi “loans” barely disguised securities because the value of the yielded tokens is based on the platform’s future performance. One plausible explanation of the SEC’s action is that it believes Coinbase is similarly subsidizing its interest rates from its own operating revenue.

That being said, Coinbase’s side of the story paints a disappointing picture of the SEC under new head Gary Gensler. As the exchange points out in its account, Gensler has repeatedly said he wants dialogue with crypto companies, but it seems he may not understand that that’s a two-way street.

Coinbase Threat Shows There’s A New Crypto Sheriff In Town

U.S. Securities and Exchange Commission Chair Gary Gensler just put the cryptocurrency industry on notice of how far the regulator will to go to tame a market he’s labeled the wild west of finance.

In threatening to sue Coinbase Global Inc. if the exchange lets customers earn interest on their digital tokens, the SEC sent a warning to other firms already offering similar products or contemplating doing so. The move is the clearest sign yet that, under Gensler, the regulator will aggressively use its powers to thwart products it’s uncomfortable with — even before they launch.

Privately, ex-SEC officials said they were shocked by the agency’s posture, which Coinbase disclosed Tuesday in a blog post. The former officials said the SEC typically waits for firms to start selling investments before announcing possible sanctions, indicating the agency has found a forceful way to shut down cutting-edge crypto offerings it fears are putting consumers at risk. Coinbase slid 3.2% to $258.20 in New York trading on news of the SEC’s pending enforcement action.

“The SEC is being aggressive for the first time in a long time,” said James Cox, a professor at Duke University School of Law. “The SEC has been putting a lot of muscle into cryptocurrency. It’s a big, fast-growing market and a fertile area for abuses.”

SEC officials declined to comment.

When Gensler took the reins at the SEC in April, many crypto enthusiasts cheered. That’s because the former Goldman Sachs Group Inc. partner knew finance and had taught a class on digital assets at the Massachusetts Institute of Technology — a background far different from most Washington officials, who had a limited understanding of the booming market.

But that optimism has all but faded after Gensler made clear in speeches and congressional testimony that a crackdown was looming. In July, he referred to the industry as “the wild west of our financial system” that “desperately needs rules of the road.” Gensler also said the SEC will step up efforts to hold firms accountable for offering products that may involve securities, including in decentralized financial or DeFi platforms.

At issue is Coinbase’s Lend product, which promises investors they can earn 4% annually by lending out their USDC virtual tokens. USDC, which is offered by a consortium of firms including Coinbase, is a stablecoin — a fast-growing corner of the crypto market that allows traders to easily convert their digital assets into cash and vice versa.

Stablecoins have been the focus of intense scrutiny from top U.S. officials this year, including Gensler and Treasury Secretary Janet Yellen. Watchdogs have raised numerous concerns, including that the tokens should probably be registered with regulators so that they adhere to strict investor protection rules. Officials are also worried about crypto firms promising high-yields without complying with banking requirements, such as deposit insurance.

Coinbase’s tussle with the SEC became public when Paul Grewal, the company’s chief legal officer, said the SEC determined that Lend involved “a security, but wouldn’t say who or how they’d reached that conclusion.”

Grewal added that the agency told Coinbase “that if we launch Lend they intend to sue,” prompting the company to shelve the product until at least October. Coinbase Chief Executive Officer Brian Armstrong later tweeted that the SEC was engaging in “really sketchy behavior.”

The crypto exchange won support from at least one long-time SEC adversary: Billionaire entrepreneur Mark Cuban. In a series of tweets, he urged Coinbase to fight back to prevent the agency from winning a legal ruling that allows it to assert more authority over tokens and DeFi. Cuban famously prevailed against the SEC in 2013 after it accused him of insider trading.

The worst case is that the SEC gets a judgement that cripples Crypto/DeFi and moves it even further offshore, killing possibly trillions of $$$ in economic benefit for the USA. We need exemptions like the internet got in the 90s. Call your congressperson #savecryptofromtheSEC https://t.co/BnS3jk4yXr

— Mark Cuban (@mcuban) September 8, 2021

There are signs the SEC was already scrutinizing Coinbase’s plans. Last month, the company disclosed in a regulatory filing that it had “received investigative subpoenas from the SEC and similar subpoenas and demand letters from various state regulators for documents and information about certain of our customer programs, operations, and intended future products, including our stablecoin and yield-generating products.”

Despite Coinbase’s bewilderment, the SEC has long argued that a range of tokens fall under its jurisdiction. Over the past four years, the SEC has consistently asserted that many digital assets are investment contracts or securities based on a legal theory knows as the Howey Test laid out in a 1940s Supreme Court case. The regulator’s stance is that almost anything that gives investors the expectation of profiting from the work of others can be labeled an investment contract.

Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,Strike To Offer ‘No,

Strike To Offer ‘No Fee’ Bitcoin Trading, Taking Aim At Coinbase And Square

Related Articles:

Your Questions And Comments Are Greatly Appreciated.

Monty H. & Carolyn A

Leave a Reply Cancel reply