Coinbase CEO says SEC wants to ban retail staking
Coinbase CEO Brian Armstrong said: February 8 His company heard rumors that a major US securities regulator was about to ban staking.
Armstrong wrote on Twitter:
“We are hearing rumors. [U.S. Securities and Exchange Commission] We want to end cryptocurrency staking for retail customers in the US. I hope it doesn’t because I think it would be a terrible road for the United States if it was allowed. ”
Staking involves depositing cryptocurrencies into contracts. Those who do may earn interest on their deposits and verify blocks if they bet on-chain. This practice is believed to be much more efficient and scalable than alternatives such as Bitcoin mining.
Armstrong defended the practice on these points. “Staking is not security,” he said, adding that it brings various benefits to crypto networks.
He also referenced earlier discussions that took place last year when Ethereum moved to a staking model. At the time, one of the arguments against regulation said that staking did not include a common undertaking or intention to profit solely from the efforts of others. These are the two necessary criteria for investment contracts to be regulated under securities law.
Coinbase has already faced scrutiny from the SEC regarding adjacent interest-bearing products. The company canceled Lend products after regulators threatened to prosecute him in 2021.The company also said in late 2022 that his SEC Information requested For services, including “staking programs, stablecoins, and yield-generating products.”
It is not clear if the SEC intends to ban staking to third-party providers like Coinbase, or restrict staking at a more basic level. Otherwise, it will be difficult for regulators to achieve the latter.
Prominent blockchains and coins that rely on staking include Ethereum (ETH), BNB Chain (BNB), Cardano (ADA), Polkadot (DOT) and Avalanche (AVAX).