Brian Armstrong, the CEO of Coinbase, has said that the firm has heard rumours regarding the imposition of a prohibition on staking by the US SEC. The CEO noted in a post on his official Twitter account that the Securities and Exchange Commission of the United States would reportedly intend to ban US retail consumers from staking crypto assets. Nonetheless, he expressed his expectation that the respective rumours may not be true.
Coinbase CEO Asserts SEC Plans to Place a Prohibition on Retail-Staking Practices
On the other hand, he asserted that if that takes place in the US, it will pave the way for terrible consequences. In staking, the consumers deposit crypto assets to start a contract. This takes into account those who are interested in earning interest on the assets deposited by them. In addition to this, the people involved in staking may require validating blocks in the case of on-chain staking.
The respective practice is known as considerably more scalable and effective than the substitutes, such as mining Bitcoin. The Coinbase CEO defended the respective practice saying that staking does not denote security. He added that it offers diverse benefits to the networks operating within the crypto industry. He then referred to the transition of the Ethereum network to a staking mechanism in the previous year.
At that time, an argument that the staking procedure takes into account no mutual intent or enterprise to get profits just from other people’s efforts. Following the Twitter post of Armstrong, a commentator asserted to have verified a multi-agency measure taken against the crypto exchange. Nonetheless, the sources acquainted with the matter claim that the respective assertions are not true.
After the crash of the crypto exchange named FTX back in November, the examination division of the US securities regulator has been paying considerable attention to digital and crypto assets. The regulator stated that the respective division would organize an examination of RIAs and broker-dealers that are utilizing the latest practices or exclusive financial technologies.
These take into account online and technological solutions to cope with the demands related to marketing and compliance. Recently, it was reported by Bloomberg that the Kraken (a well-known crypto exchange) is going through a probe from the SEC over the supposedly offering securities without getting them registered.
US Securities Regulator Tightens up Scrutiny over Coinbase
The SEC has in advance been scrutinizing the crypto exchange over contiguous interest-bearing products. The crypto exchange terminated its Lend product back in 2021, as the US regulatory agency threatened to level charges against it. The platform additionally mentioned in the latter part of the previous year that the Securities and Exchange Commission has demanded information regarding the services provided by Coinbase.
These particulars were related to yield-generating and stablecoin products. At present, it is ambiguous if the SEC allegedly has any intent to prohibit staking on Coinbase or the rest of the 3rd-party providers or if it wants to ban the staking practices at the core level.
Nonetheless, it would be hard for the regulatory entity of the United States to put an outright ban on crypto-staking activities if a conventional currency has no involvement in this. Top blockchain platforms and tokens that depend on staking take into account Ethereum (ETH), Avalance (AVAX), Polkadot (DOT), Cardano (ADA), BNB Chain (BNB), and so on.
