Coinbase to continue offering staking despite SEC crackdown
- Coinbase notes that users earn rewards from the decentralized protocols, and not from the exchange itself.
- Earlier this year, Kraken shut down its staking in the US following SEC allegations.
Leading cryptocurrency exchange Coinbase in an email to customers emphasized that its staking services will continue despite the regulatory crackdown.
“Coinbase acts only as a service provider connecting you, the validators, and the protocol,” the company stated, adding that there will also be a “transparent Coinbase fee.” The exchange further reiterated that users earn rewards from the decentralized protocols and not from the exchange itself.
“Your staked assets will continue earning rewards. If you want to continue staking, no action is required. Your staking rewards may actually increase”, the exchange noted.
In the email to customers, Coinbase also noted that any asset staked on its platform might take a “few hours or a few weeks” before it can be unstaked and moved or sold. The exchange added that the delay is owing to protocol rules and Coinbase’s processing time.
This latest update by Coinbase comes amid the United States Securities and Exchange Commission cracking down on staking services offered by crypto firms. Earlier this year, crypto exchange Kraken agreed to pay $30 million in fines and shut down its staking in the US following SEC allegations that the exchange did not register the offering and sale of its crypto asset staking-as-a-service program.
SEC had issues with how Kraken determined the returns that its customers would receive, in contrast to the variable rate of rewards determined by the protocol.
“Defendants determine these returns, not the underlying blockchain protocols, and the returns are not necessarily dependent on the actual returns that Kraken receives from staking,” SEC had written in its complaint against Kraken offering staking.
Kraken, Coinbase, and other centralized providers had been offering “staking as a service” for a while, letting users stake their coins without buying or maintaining the computers needed.
SEC strongly considers both crypto lending and staking-as-a-service programs to be securities. This strong view of SEC has made offering crypto staking services in the US a headache for crypto firms like Coinbase.