The CEO of Coinbase says he would “gladly defend” the crypto staking service against claims that it is a security
The CEO of the cryptocurrency exchange Coinbase, Brian Armstrong, stated on Twitter on Monday that the business would be “glad defend” its staking services in court against accusations that they need to be categorized as securities. The largest cryptocurrency exchange in the United States is Coinbase, which is listed on the Nasdaq. On Friday, its stock price was down 2.5% to US$57.09.
Staking services provided by Coinbase are not considered securities. If necessary, we will defend this in court,” tweeted Armstrong, reposting a blog post by Coinbase’s chief legal officer, Paul Grewal.
According to Grewal, the Howey test used by the U.S. Securities and Exchange Commission (SEC) to evaluate whether an investment contract is a security, does not apply to staking.
In Grewal’s view, Coinbase’s cryptocurrency staking services fail the Howey test in every respect since they are neither centralized nor entrepreneurial, and because customers always retain control of their holdings.
Grewal said that if the U.S. government imposes securities legislation on crypto staking, customers in the country would be forced to seek out services on unregulated offshore platforms.
Kraken, a cryptocurrency exchange located in the United States, was fined US$30 million by the SEC last week for failing to register its cryptocurrency staking operations. In reaction, Kraken said on Thursday that its on-chain staking services will be discontinued for customers in the United States.
Paxos Trust Company, the owner and issuer of the Binance USD (BUSD) stablecoin, is also apparently on the SEC’s hit list for a lawsuit since the SEC views BUSD as an unregistered security.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.