• Coinbase CEO Brian Armstrong is challenging the SEC’s stance that crypto staking services are securities, claiming they cannot be classified as such and threatening to take the matter to court if needed.
• The company’s chief legal officer, Paul Grewal, argues that staking fails to meet the four elements of the Howey test and that trying to impose securities law on it does not help consumers.
• Coinbase is determined to defend its crypto staking services and ensure US customers can access basic crypto services.
Coinbase Challenges SEC Stance on Crypto Staking Services
Coinbase’s executives are standing up for its crypto staking services in the United States, claiming they cannot be classified as a security and threatening to bring the matter to courts if needed. On Feb. 12, Coinbase CEO Brian Armstrong posted on Twitter that the company will „defend this in court if needed.“ This follows Kraken’s agreement with the Securities and Exchange Commission (SEC) on Feb. 10 to stop offering staking services or programs in the country due to them being qualified as securities by SEC.
Coinbase Chief Legal Officer Argues Staking Fails Howey Test
Coinbase’s chief legal officer Paul Grewal weighed in on the issue in a blog post, claiming that „staking is not a security under the US Securities Act, nor under the Howey test.“ He argued that trying to superimpose securities law onto processes like staking would prevent US consumers from accessing basic crypto services and push users towards offshore, unregulated platforms.
Grewal added that staking fails to meet all four elements of the Howey test: investment of money, common enterprise between investors and promoters, expectation of profits from promoter’s efforts rather than own efforts, and an investment of money with an expectation of profits stemming from third-party efforts.
Kraken Agrees To Pay $30 Million In Disgorgement And Penalties
In response to failing „to register their crypto asset staking-as-a-service program,“ Kraken agreed to pay $30 million in disgorgement, prejudgment interest and civil penalties apart from halting their service altogether.
Coinbase Vows To Defend Crypto Stakiing Services In Court
Coinbase is determinedly defending its crypto stakiing services with CEO Brian Armstrong vowing “to defend this in court if needed“, while ensuring US customers can access basic crypto services without any hindrances or restrictions imposed upon them by authorities or government bodies like SEC or FinCEN.
Crypto exchange Coinbase has taken a strong stance against SEC’s classification of its crypto stakiing services as securities by challenging it legally if necessary and vowing “to defend this in court“. The company has also been vocal about how imposing such restrictions does not benefit US customers but instead pushes them towards offshore platforms which may lack adequate regulations thus posing serious risks for consumer safety