Key takeaways:
- Brian Armstrong, CEO of Coinbase, claims to have heard allegations that the SEC is considering outlawing bitcoin staking in the US.
- Armstrong expressed his displeasure with the rules, stating they are excessively onerous and harmful to the broader cryptosphere.
The Securities and Exchange Commission may be getting ready to tighten down on “staking,” according to the CEO of Coinbase, which would be disastrous for the cryptocurrency broker’s operations and probably affect Ether, the second-largest cryptocurrency behind Bitcoin.
Brian Armstrong, the CEO of Coinbase, has denounced recent allegations of limitations on cryptocurrency staking in the US. He criticised the Securities and Exchange Commission in a series of tweets for hindering innovation and the development of the country’s crypto business.
Coinbase co-founder and CEO Brian Armstrong tweeted on Wednesday, “We’re hearing reports that the SEC would like to get away from crypto staking in the U.S. for retail users.”
It is crucial to remember that Staking is a significant advancement in the world of cryptocurrency. It enables direct user involvement in the management of open crypto networks. Scalability, increased security, and smaller greenhouse emissions are just a few of the advantages of staking for the space.
In the aforementioned ways, Armstrong defended the practice of staking. Additionally, he stated that “staking is not a security” and that it has several advantages for crypto ecosystems.
He also brought up a previous argument that arose when Ethereum switched to a staking arrangement last year. Staking, according to one argument at the time opposing regulation, does not contain a joint enterprise or the intention to benefit entirely from the labour of others, which are two requirements for investment agreements to fall under the purview of securities law.
Armstrong however, refused to mention the source of the rumors.
For both Coinbase and Ether, this action would be detrimental. Coinbase would lose a high-margin income stream that appears to be a growth engine. With annualised staking incentives of $3 billion, the total staked valuation in Q4 2022 exceeded $40 billion. In fact, more than 10% of Coinbase’s revenue in 2017 came from blockchain rewards.
Coinbase had a rough start to 2023; after only two months, the company was fined in the Netherlands and forced to cease operations in Japan. Even worse, an ex-Coinbase manager recently entered a guilty plea in the first-ever insider trading case involving cryptocurrency.
