The CEO and co-founder of cryptocurrency exchange Coinbase, Brian Armstrong, believes that banning retail crypto staking in the United States would be a \u2018terrible\u2019 move by the country’s regulators.\u00a0<\/p>\n
Armstrong made<\/a> the comments in a Feb. 9 Twitter thread which has already been viewed over 2.2 million times, after noting they’ve heard \u201crumors\u201d that the U.S. Securities and Exchange Commission \u201cwould like to get rid of crypto staking\u201d for retail customers.<\/p>\n \u201cI hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.\u201d<\/p><\/blockquote>\n Armstrong did not share where the rumors originated from but continued to note that staking was \u201ca really important innovation in crypto.\u201d<\/p>\n \u201cStaking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints,\u201d he added. <\/p>\n 2\/ Staking is a really important innovation in crypto. It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints.<\/p>\n \u2014 Brian Armstrong (@brian_armstrong) February 8, 2023<\/a><\/p><\/blockquote>\n Armstrong also referenced<\/a> an Oct. 5 blog post from crypto investment firm Paradigm, which argued that Ethereum\u2019s transition to proof-of-stake and its subsequent \u201cstaking\u201d model does not make it a security.<\/p>\n The Paradigm post came just a few weeks after SEC Chairman Gary Gensler suggested that proof-of-stake (PoS) cryptocurrencies could trigger securities laws<\/a> on Sep. 15, 2022, while speaking to reporters after a Senate Banking Committee meeting.<\/p>\n Armstrong also lambasted the current lack of regulatory clarity in the U.S. and subsequent \u201cregulation by enforcement\u201d that he says is driving companies offshore, such as crypto exchange FTX. <\/p>\n He has reiterated calls for regulation that provides clear rules for the industry while preserving innovation.<\/p>\n Related: <\/strong>Crypto exchange Kraken faces probe over possible securities violations: Report<\/em><\/strong><\/a><\/p>\n According to Staking Rewards, the top four staked cryptocurrencies by market cap account for over $55 billion in staked assets, suggesting a country-wide ban would be a huge hit to the country\u2019s crypto industry which has already seen an exodus of crypto-related businesses<\/a>.<\/p>\n Some industry commentators have suggested that the SEC might go after centralized parties which offer staking services rather than the technology itself, believing the latter would be a losing battle which would \u201ccrush them in precedent.\u201d<\/p>\n Timely reminder that https:\/\/t.co\/splf30ft12<\/a> outlines the legal arguments of ETH staking under the Howey Test.<\/p>\n I believe the SEC would likely go after centralized parties offering staking, and not PoS itself as that’d be a harder fight that could crush them in precedent. https:\/\/t.co\/YiD2Cpxx6z<\/a><\/p>\n \u2014 Adam Cochran (adamscochran.eth) (@adamscochran) February 8, 2023<\/a><\/p><\/blockquote>\n The general counsel for Delphi Digital\u2019s research and development arm, Gabriel Shapiro, suggested there is a strong argument that staking services provided by centralized exchanges like Coinbase constitute a security, drawing parallels between them and other \u201cEarn\u201d products.<\/p>\n Personally although I do think “Earn” programs offered by CEXs are debt securities, I think it is *possible* to offer pure PoS as a service, even on a CEX, without the offer being a security, depending on the details of the terms. But tbqh it’s a close case.<\/p>\n \u2014 _gabrielShapir0 (@lex_node) February 8, 2023<\/a><\/p><\/blockquote>\n Coinbase is currently subject to an ongoing SEC probe<\/a>, which Coinbase revealed in an Aug. 9, 2022 SEC filing<\/a> was in relation to its staking rewards amongst other offerings.<\/p>\n<\/div>\n\n
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