Coinbase CEO Brain Armstrong Says SEC’s Ban on Crypto Staking “Would Be a Terrible Path for the U.S.”

Brian Armstrong shared his concerns over rumors of SEC’s ban on crypto staking and how it would affect crypto industry.

Brian Armstrong sitting on rocks in a zen pose
  • Brian Armstrong has expressed concerns over the SEC’s plans to ban crypto staking for retail investors.
  • The SEC has gone after proof-of-stake projects, referring to their issued assets as securities.
  • Armstrong believes the ban will stifle the growth of crypto in the U.S.

Brian Armstrong, the CEO of Coinbase, in reacting to the rumors about the U.S. Securities and Exchange Commission (SEC) potentially preventing retail investors from engaging in cryptocurrency staking, says it would be a terrible path for the U.S.

Banning Crypto Staking will Be Terrible for the U.S.

In a recent tweet, Armstrong expressed concerns over rumors he has been hearing about a potential ban by the U.S. SEC on crypto staking for retail investors.

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Armstrong explains that banning staking, which allows users to “participate directly in running open crypto networks” for profits, will negatively impact the growth of crypto in the United States. He tweeted:

The SEC Thinks Staking Makes Cryptos Securities

The SEC’s crusade on hunting down cryptos they consider securities is no longer news. From the XRP battle to the SEC labeling nine cryptos, including AMP, RLY, POWR, and LCX securities in the world’s first insider trading.

According to SEC Chairman Gary Gensler, cryptocurrencies that allow staking could be classified as securities under the Howey test. The SEC appears to see staking as lending rather than allowing users to join in providing security for proof of stake networks.

In August 2022, Coinbase received “investigative subpoenas” over its staking programs and yield-generating products. Similarly, crypto exchange Kraken is currently being probed for whether it breached rules around offering securities.

What this Could Mean for the United States

Although Armstrong and most crypto experts argue that staking doesn’t make crypto assets securities, the SEC doesn’t see it that way. The SEC seems to think any crypto asset capable of producing yield is a security.

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Without a doubt, a ban on crypto staking will surely harm the growth of the crypto industry, possibly beyond the United States. According to a report from Staked, the value of staked assets amounted to about $42 billion in Q4 of 2022.

The rumors of banning staking come on the heels of Ethereum, the second biggest crypto preparing to allow users unstake their assets locked on the network since December 2020.  

Armstrong is advocating that new technologies like this be allowed to grow in the U.S., and not be stifled by a lack of clear rules. He insists they can work with the SEC together to draft clear rules for the industry.

On the Flipside

  • Recent progress in the ongoing Ripple battle against SEC suggests that XRP could be declared not a security and mark a landmark win for cryptos.

Why You Should Care

The U.S. continues to take enforcement actions against the crypto industry, all the while lacking a clear regulatory framework for the industry.

Read about the latest enforcement move from the SEC below:
US SEC Announces Plans to Monitor Crypto Brokers and Advisors,

Find out more about the Coinbase probe in:
The SEC Opens Probe into Coinbase’s Crypto Yield and Staking Products

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Milko Trajcevski

Milko Trajcevski is a DailyCoin news reporter, mainly focused on Ethereum (ETH), Cardano (ADA), and their founders (Vitalik Buterin and Charles Hoskinson). Milko is an avid follower of crypto and blockchain technology and has written thousands of articles on the subjects. He finds joy in transforming complex issues into written content that anyone can understand. Milko has used and analyzed numerous exchanges, such as Coinbase, FTX, and Binance. He also closely follows all of the latest news around the largest decentralized exchanges (DEXs). Location: Skopje, Macedonia