Coinbase to continue its staking services, is this a "fuck you SEC?"
By Nerly Shammah Mar 11, 2023
The publicly traded cryptocurrency exchange Coinbase, in a new email says that it will continue its staking services, citing that users stand to earn more as they continue to commit to staking their assets.
- Coinbase continues its staking services despite SEC's efforts to stop the utilization of staking investment products.
- Coinbase in a new email cites that "staking rewards come from the protocol, not Coinbase" thus it does not qualify as a security.
- The SEC has recently called out most trading platforms as unqualified custodians and has drawn a deal with Kraken in a $30 million settlement for unregistered staking services it deemed a security.
- Is this a fuck you SEC? Coinbase adds that users may observe an increase in staking rewards if they decide to commit.
- As a final note, Coinbase notes that in rare cases, users may lose their assets "due to network penalties or other errors".
Following the SEC's continual movement to make the cryptocurrency ecosystem a safe environment for investors as specified by the SEC chair, Gary Gensler, many crypto projects and investment products have suffered great turmoil since.
The movement which follows the grand explosion of the cryptocurrency ecosystem due to the rapid price increase of the cryptography protected assets that saw bitcoin hitting $69k a unit has been criticized by many crypto investors and project builders citing that the SEC is more about destroying the industry than making it better.
The movement against staking services has been one of the SEC's recent approach of supposedly protecting investors in the cryptocurrency markets, this was costly felt by one of the top cryptocurrency exchanges "Kraken" as the exchange had to pay a fine of $30 million for operating a staking service which the SEC deemed an unregistered security.
Following this, other cryptocurrency exchanges including Coinbase, led by Brian Armstrong has had to trade more carefully with operating staking services, however, on recently shared email on crypto twitter, Coinbase appears to be moving forward with its staking offerings, however noting that rewards are gotten from the protocol and not Coinbase, thus implying that as the crypto exchange only serves as a service provider connecting users, the validators and the protocol that it is thus not operating a security.
The email, which was shared on twitter by @AltcoinPsycho has gained some reactions where the larger percentage are intrigued by the move from the crypto exchange, however, some concerns have been thrown towards the little disclaimer at the end of the email where Coinbase notes that users may lose their assets due to network penalties or other errors.
This goes to say that Coinbase may not be liable for any losses experienced as it is not a direct operator of the staking services but only a bridge. That said, as reported by cointelegraph, A key part alleged in the SEC’s complaint with crypto staking services was that users lost control of their tokens by offering them to Kraken’s staking program, and investors were offered “outsized returns untethered to any economic realities” with Kraken also able to pay “no returns at all” in which case with Coinbase's new approach to crypto staking, the program stands different to what the SEC defined as an "unregistered security".
In the not too distant past, the SEC also declared most trading platforms unqualified custodians, proposing new regulations for advisers of which commissioner Hester M. Peirce stood against, citing the questionable timeline for implementation and the risk that there is to crypto investors, explaining that this rather exposes them to more fraud and theft than solve any actual problems.