Coinbase CEO Brian Armstrong says that the staking services offered by the US crypto exchange are not securities.
Hot on the heels of the U.S. Securities and Exchange Commission (SEC) shutting down the staking service of rival crypto exchange Kraken, Armstrong says that Coinbase will mount a legal defense of its staking service if the need arises.
“Coinbase’s staking services are not securities. We will happily defend this in court if needed.”
Last week, following the SEC’s actions against Kraken, Coinbase’s chief legal officer Paul Grewal argued that existing US laws suggest that staking is not a security.
“Staking is not a security under the US Securities Act, nor under the Howey test, which the SEC uses to determine whether an investment contract is a security…
Staking fails to meet the four elements of the Howey test: investment of money, common enterprise, reasonable expectation of profits and efforts of others.”
Grewal also said that applying securities law to staking could negatively impact US investors and potentially drive them to riskier jurisdictions.
“The purpose of securities law is to correct for imbalances in information. But there is no imbalance of information in staking, as all participants are connected on the blockchain and are able to validate transactions through a community of users with equal access to the same information.
Trying to superimpose securities law onto a process like staking doesn’t help consumers at all. Instead, unnecessarily aggressive mandates will prevent US consumers from accessing basic crypto services in the US and push users to offshore, unregulated platforms.”
Don’t Miss a Beat – Subscribe to get crypto email alerts delivered directly to your inbox
Check Price Action
Follow us on Twitter, Facebook and Telegram
Surf The Daily Hodl Mix
Generated Image: Midjourney