Ruling Against Terraform Establishes Stablecoins Can Be Securities; Scrutiny Looms Over Coinbase's USDC Rewards
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Judge Rakoff issued a summary judgment against Do Kwon and Terraform Labs, finding that the stablecoin UST was an unregistered security when offered with the Anchor lending protocol.
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The ruling establishes precedent that stablecoins can be considered securities when offered with secondary protocols promising yields.
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USDC faces similar scrutiny as Coinbase offers 5.1% rewards for holding the stablecoin, which experts say equates to an investment contract.
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Coinbase is on dangerous legal ground with its USDC rewards program according to regulatory experts.
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The judgement against Terraform Labs and ambiguities around USDC regulation indicate an urgent need to update financial regulations around crypto.