Getting rid of crypto stakes would be a ‘terrible path’ for US – Coinbase CEO
CEO and co-founder of cryptocurrency exchange Coinbase, Brian Armstrong, believes banning retail crypto-stakes in the US would be a “terrible” move by the country’s regulators.
Armstrong made the comments in a February 9 Twitter thread that has already been viewed over 2.2 million times, after noting that they have heard “rumors” that the US Securities and Exchange Commission “wants to get rid of crypto stakes ” for private customers.
“I hope that’s not the case, as I think it would be a terrible path for the United States if it were allowed to happen.”
Armstrong did not share where the rumors originated, but noted that staking was “a really important innovation in crypto.”
“Staking brings many positive improvements to the space, including scalability, increased security and reduced carbon footprints,” he added.
Armstrong also referenced an Oct. 5 blog post from crypto investment firm Paradigm, which argued that Ethereum’s move to proof-of-stake and its subsequent “staking” model does not make it a security.
The Paradigm filing came just weeks after SEC Chairman Gary Gensler suggested that proof-of-stake (PoS) cryptocurrencies could trigger securities laws. He made the remarks on September 15 while speaking to reporters after a meeting of the Senate Banking Committee.
Armstrong also criticized the current lack of regulatory clarity in the US and subsequent “regulation by enforcement” which he says is driving companies offshore, such as crypto exchange FTX.
He has repeatedly called for regulation that provides clear rules for the industry while preserving innovation.
Related: Crypto exchange Kraken faces investigation over possible securities breach: Report
According to Staking Rewards, the top four staking cryptocurrencies by market capitalization account for over $55 billion in staking assets, suggesting that a nationwide ban would be a major hit to the country’s crypto industry, which has already seen an exodus of crypto-related businesses.
Some industry commentators have suggested that the SEC may go after centralized parties that offer betting services rather than the technology itself, arguing that the agency attacking the latter would be a losing battle that would “crush them in precedent.”
The general counsel of Delphi Digital’s research and development arm, Gabriel Shapiro, suggested that there is a strong case for staking services provided by centralized exchanges such as Coinbase as a security, drawing parallels between them and other “Earn” products.
Coinbase is currently the subject of an ongoing SEC investigation, which Coinbase revealed in an August 9 SEC filing was in relation to the stake rewards among other offerings.
