We do the research, you get the alpha!
Crypto exchange Coinbase has announced that customers in over 70 countries are able to earn yield with their crypto holdings through the world of decentralized finance (DeFi).
“We are making DeFi more accessible, enabling eligible customers in more than 70 countries to access the attractive yields of DeFi lending on their DAI with no fees, lockups, or set-up hassle,” Coinbase said in a prepared statement.
Making DeFi more accessible
At the heart of this move is Coinbase’s desire to make DeFi “more customer friendly and approachable.”
Using the DAI stablecoin, customers can opt in to earn DeFi yield. Customers’ DAI holdings will be deposited with Compound Finance, which Coinbase describes as an “industry leading” DeFi protocol. The interest on this yield is, however, variable.
For example, in October, Compound’s rates for supplying DAI fluctuated between 2.8% and 5.3%. “The higher rates reflect both the unique access to global liquidity and increased risk that can come with DeFi,” Coinbase said.
Despite that risk, Coinbase remains bullish on the promise of DeFi. “DeFi has tremendous potential to help increase economic freedom, and we’re excited to be able to provide a trusted and accessible way to participate,” the exchange added.
There is, however, one glaring omission in this announcement.
Despite rolling services out to 70 eligible countries, including major economies like Germany and the United Kingdom, Coinbase's DeFi yield is not yet available to customers in the United States.
The US, Coinbase, and DeFi
In September, Coinbase CEO Brian Armstrong took to Twitter to vent amid an SEC threat to sue the exchange if it launched its yield-earning product called Lend.
“Some really sketchy behavior coming out of the SEC recently,” Armstrong said, lamenting the fact the SEC said Coinbase’s Lend would be a security, a stance he was widely criticized for at the time.
“They refuse to tell us why they think it’s a security, and instead subpoena a bunch of records (we comply), demand testimony from our employees (we comply), and then tell us they will be suing us if we proceed to launch, with zero explanation as to why,” he also said.
Meanwhile, the SEC—and chairman Gary Gensler—has had some choice words for the DeFi industry.
Throughout the year, Gensler has repeatedly raised the red flag, saying that the DeFi industry—as well as the wider world of crypto—is in need of more robust consumer protection laws.
“There’s a lot of lending going on. There’s a lot of trading going on. And without protections, I fear that it’s going to end poorly,” Gensler said in October.