Coinbase CEO criticizes a possible ban on staking in the US
In Brian Armstrong’s opinion, this would be a “terrible path” for the country
09.02.2023 - 07:15
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Coinbase CEO Brian Armstrong says he's heard rumors the U.S. Securities and Exchange Commission would like to ban retail investors from engaging in cryptocurrency staking, the income-generating technique at the core of running blockchains including Ethereum.
"I 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," he tweeted Wednesday.
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I 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.— Brian Armstrong (@brian_armstrong) February 8, 2023
The SEC declined to comment.
While Armstrong's suspicions may come as a surprise to many in the industry, SEC Chairman Gary Gensler has previously stated that cryptocurrencies that allow staking could be classified as securities under the Howey test – even though ether has been designated as a commodity by the SEC's sister regulator, the Commodity Futures Trading Commission (CFTC).
After a Congressional hearing in September 2022, Gensler told reporters that, though he wasn't referring to any token in particular, staking was "another indica that under the Howey test, the investing public is anticipating profits based on teh efforts of others."
A significant amount of money is staked. The value of staked assets was about $42 billion in the fourth quarter of 2022, with annualized staking rewards of $3 billion, according to a report from Staked, a non-custodial staking service provider. That figure was not limited to just retail investors.
Alison Mangiero, the executive director of the Proof of Stake Alliance (POSA) told CoinDesk that her organization opposes any assertion that staking constitutes an unregistered security.
"Staking tends to get misconstrued with unrelated activities like lending, but staking is fundamentally a way for anyone to join in providing security for proof of stake networks," Mangiero said. "The existence of staking service providers allows everyday Americans to participate in staking, which democratizes network consensus and validation and is core to the continued growth of the global decentralized internet. Any regulatory action that runs counter to this misunderstands the nature of staking, and hinders America's ongoing efforts to foster domestic technological innovation."
This material is taken from the website coindesk.com.
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