Coinbase CEO: SEC would like to ban retail investors from engaging in crypto staking

By Selena 02/9/23 10:26 AM

Crypto exchange Coinbase CEO Brian Armstrong says the US will go “a terrible path” if it bans staking.

2/ Staking is a really important innovation in crypto. It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints.

— Brian Armstrong (@brian_armstrong) February 8, 2023

In the early morning of February 9, CEO Brian Armstrong of Coinbase, the largest crypto trading platform in the United States, wrote a long series of posts on Twitter mentioning the possibility that the US Securities and Exchange Commission (SEC) is about to ban the type. staking cryptocurrency.

However, Armstrong did not specify what he meant when he said that the SEC only banned “small investors” instead of all. The CEO next mentioned the uses and benefits that staking brings to blockchains, because this is a method of using assets to help protect and operate the blockchain, while ensuring decentralization.

Armstrong said that while it is true that the crypto industry still needs regulation, those regulations need to be appropriate so as not to hinder progress in the industry. Issuing a ban instead of regulation won’t help either, as it would cause crypto companies to move out of the US, which happened with FTX, and cause the US to lose its technological edge to the competition.

The SEC declined to comment. However, SEC Chairman Gary Gensler since September 2022 has “recognized” that the staking model can be considered a type of security, and therefore must be registered with this agency to be able to operate and provide. services for US investors. Gensler’s comments at the time came in the context of Ethereum, the world’s second largest cryptocurrency network, successfully implementing The Merge upgrade to support ETH staking.

A substantial sum of money is risked. A research from Staked, a non-custodial staking service provider, estimates that the value of staked assets was around $42 billion in the fourth quarter of 2022, with annualized staking incentives of $3 billion. This number did not only apply to retail investors.