CEO Coinbase expressed his opinion on ban on trading crypto in U. S.
2023.02.09 09:39
CEO Coinbase expressed his opinion on ban on trading crypto in U. S.
By Tiffany Smith
Budrigannews.com – Brian Armstrong, CEO and co-founder of the cryptocurrency exchange Coinbase, believes that the United States’ regulators would make a “terrible” decision if they banned retail crypto staking.
After noting that they had heard “rumors” that the U.S. Securities and Exchange Commission “would like to get rid of crypto staking” for retail customers, Armstrong made the remarks in a Twitter thread on February 9 that has already been viewed over 2.2 million times. Armstrong stated that they had heard these “rumors.”
“I hope that’s not the case because I think that if that were allowed to happen, it would be a terrible path for the United States,” I said.
Although he did not specify the source of the rumors, Armstrong stated that staking was “a really important innovation in cryptocurrency.”
He continued, “Staking brings many positive improvements to the space, including increased security, scalability, and reduced carbon footprints.”
2/ Staking is a significant cryptocurrency innovation. It enables users to directly participate in the operation of open crypto networks. Staking adds scalability, increased security, and reduced carbon footprints to the space in a number of positive ways.
Armstrong also mentioned a blog post that Paradigm, a crypto investment firm, wrote on Oct. 5 arguing that Ethereum’s move to proof-of-stake and subsequent “staking” model do not make it a security.
After SEC Chairman Gary Gensler suggested that proof-of-stake (PoS) cryptocurrencies could trigger securities laws, the Paradigm post came just a few weeks later. He made the remarks on September 15 while speaking with reporters following a meeting of the Senate Banking Committee.
Additionally, Armstrong criticized the U.S.’s current lack of regulatory clarity and its subsequent “regulation by enforcement,” which, according to him, is driving crypto exchange FTX and other businesses offshore.
He has reiterated his calls for industry-wide regulation that preserves innovation while providing clear guidelines.
Staking Rewards says that the top four most staked cryptocurrencies by market cap account for over $55 billion in staked assets. This means that a country-wide ban would hurt the country’s crypto industry, which already has businesses that deal with crypto.
Some industry commentators have suggested that the SEC might target centralized parties that provide staking services rather than the technology itself because the latter would be a losing battle that would “crush them in precedent,” according to them.
A timely reminder that provides an overview of the legal justifications for ETH staking under the Howey Test.
The SEC would probably target centralized parties that offer staking, not PoS itself, as that would be a more difficult fight that could set a bad precedent.
Gabriel Shapiro, general counsel for Delphi Digital’s research and development division, suggested that centralized exchange staking services like Coinbase’s constitute a security and drew comparisons to other “Earn” products.
Although I do consider CEX “Earn” programs to be debt securities, I believe it is possible to offer pure PoS as a service, even on a CEX, without the offer being a security, depending on the terms. However, it’s a close call.
In an Aug. 9 SEC filing, Coinbase disclosed that the ongoing investigation into its staking rewards and other offerings is targeting Coinbase.
