Coinbase CEO Won’t Take a Kraken-like Attitude
After the SEC shut down the yield program of Kraken, named Earn, for alleged securities, the eyes were turned to Coinbase, which has a similar program.
Coinbase CEO Brian Armstrong issued a statement on the subject on Twitter and made it clear that he would not back down: “Coinbase’s staking services are not securities. We will happily defend this in court if needed.”
Armstrong also shared an article at the end of his statement written by Paul Grewal, his attorney working as Coinbase’s chief legal officer, on the subject. Here are Grewal’s thoughts on the subject:
“Staking is a process in which a network participant contributes to the security of a blockchain and is rewarded for their efforts.
Staking services provided by companies like Coinbase are not considered securities under the U.S. Securities Act and the Howey test used by the SEC to determine whether an investment contract is a security.
Staking is not an investment of money, does not meet the joint venture principle, has no reasonable expectation of profit, and does not pay rewards based on the efforts of others. Staking services provided by companies like Coinbase are IT services, not investment services. Enforcing securities law on staking will not help consumers as it will prevent US consumers from accessing essential crypto services.”
It is unclear whether the SEC will also impose sanctions against Coinbase. However, the altcoins of many decentralized staking platforms in the market benefited from this situation and rose.
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