The world’s most valuable crypto exchange is facing an impending legal battle with the world’s most prestigious financial regulator, according to Coinbase’s most recent trading activity. 

Bloomberg data shows that Coinbase lost about 3.23% to $258.20 in New York trading, in response to news that the SEC was preparing to take action.  

Consequently, its market value decreased by $1.75 billion, with a current market value of $54.46 billion. 

The Chairman of the Securities and Exchange Commission just signalled how far he is willing to go to bring order to a market described by him as the wild west of finance.  

Coinbase Global Inc. is a warning to other firms that offer similar products or are contemplating doing so, as the SEC threatened to sue the exchange if it allowed users to earn interest on their digital tokens. Under Gensler, the agency will aggressively thwart any product it does not likeeven before they are launched.  

The issue is Coinbase’s Lend product, which offers investors 4% interest on USDC virtual tokens by lending them out. The stablecoin USDC is one of several stablecoins currently available on the market, including one offered by Coinbase. It allows traders to buy and sell hard assets easily and vice versa.  

Coinbase’s plans have already been scrutinized by the SEC. As reported in a regulatory filing last month, the company had received investigative subpoenas from the SEC and similar documents from financial regulators regarding certain customer programs, operations, and future products, including stablecoins.