Brain Armstrong, Coinbase CEO, stated that US Securities and Exchanges Commission intends to restrict retail investors from crypto retail staking. Coinbase’s CEO declined to specify the information origin, referring to it as “rumors,” but characterized it as a “terrible” concept.
Armstrong stated on Twitter:
“We hear rumors that the (US Securities and Exchanges Commission) would like to get rid of crypto staking in the US for retail customers. I hope that’s not the case as I believe it would be a terrible path for the US if that were allowed to happen.”
Staking is the process of placing a cryptocurrency into an agreement. They can also validate blocks if they choose to stake on the chain, and this process to be sufficient and scalable than other options like Bitcoin mining.
Armstrong defended staking, arguing that it is not a security, highlighting its benefits to cryptocurrency networks. He clarified that “staking is not a security” and emphasized its advantages.
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Armstrong also mentioned a debate after Ethereum’s transaction to staking approach the previous year. There was an argument against regulation that staking lacked the objective of profiting solely from the actions of others.
Previous CoinBase Investigation
The SEC has previously investigated Coinbase for its interest-generating offerings. The company discontinued its Lend product after facing the threat of charges from the regulator in 2021. Coinbase reported that the SEC asked for details on its services. The required elements include its staking programs, yield-generating products, and stablecoin offerings in late 2022.
The SEC’s intent could be unclear, whether they plan to ban staking through third-party providers like Coinbase or limit staking. However, it would be easier for the regulator to implement the latter if fiat currency had no involvement.
Staking used Several well-known blockchains and cryptocurrencies that utilize them, including Ethereum (ETH), BNB Chain (BNB), Cardano (ADA), Polkadot (DOT)), and Avalanche (AVAX), among others.
In 2020, the SEC initiated legal action against Ripple Labs Inc. The SEC claims that the payment network operated by Ripple, which utilizes the XRP cryptocurrency, constitutes unregistered security. SEC also stated that selling XRP tokens worth $1.3 billion was against the law. The lawsuit remains pending in the judicial system.
In September of last year, Ethereum, the second-largest cryptocurrency globally by market value, transitioned to a Proof-of-Stake (PoS) system, which necessitates network validators to lock up their Ether as collateral on the blockchain. In March, the Ethereum network scheduled to undergo an upgrade called “Shanghai,” permitting holders to access their staked rewards on the web.
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