Alex Mashinsky says Celsius has to wait for the fallout

The crypto community has had support for Coinbase and its CEO Brian Armstrong since the company announced in a regulatory filing on Wednesday that it received Wells notice from the US Securities and Exchange Commission.

The regulator has threatened to sue the exchange over its proposed loan program, which offers 4% interest to customers holding USDC stablecoins. The company’s CEO, Brian Armstrong, took to Twitter on September 8th to express his frustration at the regulators’ lack of clarity about why they believe the product is a security. The competing platforms Celsius and BlockFi offer similar products.

Talk to Yahoo! Funding September 8th, Celsius Network Co-Founder and CEO Alex Mashinsky said everyone in the crypto industry is looking for clarity:

“I think we’re walking through these murky waters right now and we have to get along and it will be a while before we get to grips with the rules and get started quickly.

Mashinsky told Cointelegraph that Coinbase is already offering returns on crypto assets like ether, so the SEC appears to have a specific problem with providing interest on USDC stablecoin deposits.

“The SEC claims that interest on USDC can be a security when paid to non-accredited investors. Coinbase has not asked for permission for all USDC-only assets. “

Celsius, which manages more than $ 20 billion in assets, also pays interest on USDC and other stablecoins to non-accredited investors. However, Mashinsky says Celsius is a pioneer in the field and their products “take a long time to perfect … it helps to be the first to figure things out”.

When asked if this means Celsius can successfully handle a similar regulatory review for Coinbase, he replied:

“People have to wait and see what the SEC puts out through regulation. It looks like Coinbase is looking to take the SEC to court like XRP and prove that it broke their rules.

Billionaire investor and Dallas Mavericks owner Mark Cuban took to Twitter on September 9 to advise Armstrong and Coinbase to “keep attacking” and described the move as “regulation through litigation.”

Brian, this is litigation regulation. You are unable to solve this problem on your own and you are afraid of making mistakes in the process. They leave that to the lawyers. Only those of you who do not want to influence new technologies. You have to attack

– Mark Cuban (@mcuban) September 8, 2021

At a later time tweet, he claims the SEC is “playing on its own territory to regulate” through the lawsuit, adding that doing so could change the way DeFi works, but it could also see how it evolves. Cuban urged Coinbase to actively respond to threats of legal action for the benefit of the rest of the industry.

“It would be better for the industry to accept the SEC than the SEC, which is tracking a small decentralized entity and getting a decision that will quickly become the law of the country for DeFi.”

Related: The SEC chairman warns that cryptocurrencies are too big to exist outside of public guidelines

Business writer Frances Coppola stated that she believes these “loan agreements” are considered securities by law when interest is charged or charged on a tokenized loan.

It really is that simple, Brian. You can borrow your tokens for free, and others can borrow your tokens for free. However, if you or they charge interest on borrowing tokens or otherwise benefit from borrowing tokens, then they are securities. https://t.co/kTMxNwmMkB

– (((Frances ‘Cassandra’ Coppola)))) (@Faces_Coppola) September 8, 2021

Bloomberg notes that SEC chairman Gary Gensler has just sent a warning to other crypto firms offering similar products in one of the recent aggressive moves against the industry.