Neither a Borrower nor a Lender Be – Analyzing the SEC’s Reaction to Crypto Lending

This Article looks at how the federal securities laws have been applied to cryptoassets and transactions involving cryptoassets in general, and then turns to a more detailed analysis of Coinbase’s proposed (and now abandoned) crypto lending program and BlockFi’s BIA program. Part one of the Article will provide background on the approach that has been taken by the Securities and Exchange Commission (SEC) in its typical enforcement actions involving cryptoassets. Part two examines how the planned Coinbase Lend program would have operated, along with the SEC’s reaction to the proposal. Part three of this Article describes the BlockFi lending proposal and the SEC’s response to it. Part four considers how the federal securities laws should logically apply to these products. Part five explains why additional clarification is needed, and the Conclusion offers a plea for legislative intervention to help the evolving crypto lending industry and regulators achieve certainty and balance