After a public spat with the Securities and Exchanges Commission (SEC) over stablecoin lending, America’s biggest crypto exchange Coinbase is going ahead with the product after stating in September they were caving in to SEC.
“We are making DeFi more accessible, enabling eligible customers in more than 70 countries to access the attractive yields of DeFi from their Dai with no fees, lockups, or set-up hassle,” Coinbase said.
They’ll do for you what you can do yourself, send your Dai to Compound, and collect the interest which varied between 2.83% and 5.39% in October.
The difference being that the entire process is with just one click from your Coinbase account, rather than… well two clicks if you did it yourself.
They don’t provide any detail on whether the deposited Dai is insured as that would probably make a difference, although nowadays you can get insurance yourself in defi with those insurance tokens being NFTs, which is in part what began the whole rise of the NFT scene.
They do however say you won’t pay network fees, presumably because they’ll either just call them Coinbase fees, or keep some of the interest, or subsidize it to begin with and then charge, or of course they’re using a second layer in which case all of the above still applies but Coinbase will charge less than if they were using the base layer.
Interestingly they also say: “Even when deposited with Compound, your Dai remains available to you on Coinbase at all times, letting you continue to trade and spend as usual.”
Presumably however if you do that, you won’t get any more interest, with Coinbase probably meaning more that this is kind of an instant savings account with no time locks as you can withdraw or use the dai at any time because that’s how Compound works.
“Earning DeFi-powered yield on Dai is now available for eligible Coinbase users in over 70 countries, including the United Kingdom, Germany, and Spain. DeFi Yield is not currently available for customers in the United States,” they say.
Americans can still however do two clicks, and since Compound is a set of blockchain contracts on ethereum, there isn’t quite much SEC can do about that as the ethereum node operators won’t hear them at all.
Moreover one can easily argue that the interface itself is just providing stats and/or information, it is not providing the actual content because that’s on the blockchain, it’s just a reading device.
Clearly however SEC could do something about Coinbase touching this blockchain for US residents by just sending them a letter, in great part we must think because Coinbase is too poor to afford lawyers, and very excellent ones from their billions in yearly profits.
This unnecessary – in our view – deference to SEC may well mean that ultimately it is actually Coinbase firewalling USA, rather than or at least in addition to SEC, because they chose to not utilize the workable legal system that provides the avenue to the potential for the option of offering one click blockchaining to the United States.
Ripple, Terra, and we hope anyone else that is sent a letter, have decided to get the courts to decide such matters, rather than an unelected former banker that is waiting to collect his Goldman Sachs pension.
But as it stands, and in a twist from the early days of the internet, it is now America that is getting more and more firewalled, rather than Europe.
That ‘this content is only available in USA’ might have contributed to the dominance of American tech giants. Whether the now ‘this content is not available in USA’ will contribute to Europe’s crypto dominance, remains to be seen but obviously all of this is a pretty bad look for Biden and Congress.
Especially as Americans can barely get 0.1% interest rates from their banks, while on this Lend product they can get as much as 5%, which could make a big difference to small and even big savers.