Coinbase will shut down staking service if regulators mandate censoring transactions
Coinbase CEO Brian Armstrong said on Aug. 17 that the company will suspend its staking service if regulators want it to censor transactions as a validator.
This is a hypothesis and I hope you don’t face it in real life. But if that’s the case, I think B is fine. You have to concentrate on the big picture. There may also be some better alternatives (C) or legal challenges to help you get better results.
— Brian Armstrong – barmstrong.eth (@brian_armstrong) August 17, 2022
In such a hypothetical situation, Armstrong said, the company should focus on the big picture: maintaining the integrity of the network by shutting down services.
He continued that the company can also file legal challenges against requests from authorities.
Armstrong was answering questions from rotkiapp founder Lefteris Karapetsas.
Coinbase Staking Service
Coinbase is one of the largest staking solution providers, controlling over 14% of staked Ethereum (ETH) on the beacon chain, according to Dune Analytics. data.
The US-based company revealed that cryptocurrency staking accounted for 8.5% of its revenue in the second quarter, adding that the product is a high-growth area for its business.
The company offers crypto staking solutions for Ethereum, Algorand (ALGO), Cosmos (ATOM), Cardano (ADA), Solana (SOL) and Tezos (XTZ).
it also started recently Recruitment Ethereum staking for institutional investors in early August.
Meanwhile, reports have surfaced that the SEC is investigating Coinbase’s staking product.
Verifiers and Regulatory Concerns
In light of US sanctions on Tornado Cash, the cryptocurrency community is increasingly concerned that regulators may force centralized entities under their jurisdiction to censor transactions on the Ethereum protocol. increase.
why? OFAC-compliant validators can refuse to confirm blocks on transactions that violate sanctions, if desired.
—nick.eth (@nicksdjohnson) August 14, 2022
report revealed that 66% of beacon chain depositors and validators are likely to agree to censorship demands from authorities.
In response, Ethereum co-founder Vitalik Buterin said he would like validators who respond to such censorship demands to burn staked tokens.
Meanwhile, another report highlights how sanctions against Tornado Cash will affect the Bitcoin Lightning Network and web3 projects in general.