Coinbase CEO Brian Armstrong was talking to the media about the regulatory implications on the exchange last week. Talking to the media, he claimed that the staking services offered by the exchange are not unregistered securities. It is worth noting that SEC is currently cracking down on crypto firms and projects.
The regulatory agency has had a fight with cryptocurrency exchange Kraken which is another crypto enterprise operating out of the United States. At present, many exchanges are facing charges for their staking features as unregistered securities. The regulatory agency has also cracked down on PAX and BUSD under the same allegations.
Chief Legal Officer of Coinbase Paul Grewal has recently published a blog post commenting on the matter at hand. In his publication, he mentioned that SEC has been throwing around unsubstantiated allegations about staking options. He claimed that SEC has been asking irrelevant questions about the matter for the past few days.
Coinbase’s Staking Feature to Pass Howey Test
In his words, staking is not a security option according to the Securities Act, and it does not fit the legal description of security as per Howey Test. He asserted that SEC attempting to wrongfully convict staking is going to hurt the interest of the consumers. He further exclaimed that such ideals are going to drive the cryptocurrency enterprise out of US territory.
Many investors may wonder about the main reason US regulators target staking services offered by cryptocurrency enterprises. Some assume that the returns offered by staking are more lucrative than the interest offered by traditional banks. Coinbase executives have maintained that the firm has played an important role in supporting the economic growth in the USA.
The firm has also interjected that staking is a safe and secure process that offers unique benefits by driving the technological advantages of blockchain. Some other legal experts question whether the Howey test, created in the 1930s, is suitable for measuring a technology that was created in the 21st century.