Hoskinson: “Ethereum Staking Is Problematic”

With the growing rumor that the United States Securities and Exchange Commission (SEC) is planning to ban crypto staking services, experts including Cardano founder Charles Hoskinson have shared their views on the matter. Hoskinson believes that Ethereum, one of the leading protocols in the industry, offers what he calls problematic staking.

The rumor was first coined by Coinbase CEO Brian Armstrong when he said that staking rewards when users lock up cryptocurrencies are more like dividends paid to security token holders. According to Hoskinson, the absolute inaccessibility of ETHs locked in staking smart contracts makes them look like regulated products.

“Ethereum staking is problematic. Temporarily giving away your assets to someone else to generate returns is very similar to regulated products. Unsupervised liquid staking is like the mining pools we’ve been using for 13 years.”

According to the Cardano boss, his team approached the issue of staking on the protocol with a mostly community-controlled model rather than a few users.

While the news still remains a rumour, industry participants are especially gearing up for an actual ban from the market regulator. According to Hoskinson, “fundamental misunderstanding about the realities of operation and design” will cause the SEC to classify all staking products as one and the same regardless of their differences.

The Cardano CEO believes that designing a centralized system rather than a decentralized one, as most staking protocols do, will hurt the industry. With the SEC having the power to regulate cryptocurrency until a regulatory change in the US, the commission has filed multiple sanctions lawsuits against several companies, including Ripple Labs Inc and LBRY.