With regulators in the United States taking steps to tighten their reigns on the crypto sector, there are rumors swirling that the practice of crypto staking is their next target.
On Wednesday, the CEO and co-founder of Coinbase, Brian Armstrong tweeted that there were rumors about the SEC now working on eliminating crypto staking for retail customers in the US.
He added that he was hoping it was not true because it would not be a good thing for the United States if that were to happen.
The process in which proof-of-stake tokens are deposited by users to a blockchain for keeping the network secure and getting rewards for doing so is defined as crypto staking.
After the tweet from Armstrong, there was one Twitter commentator who claimed that there was a multi-agency action taking place against Coinbase.
But, other sources stated that this claim was unsubstantiated. Chief legal officer at Coinbase, Paul Grewal also said that the claim was totally false.
After the collapse of the FTX crypto exchange last year in November, crypto and digital assets have become the top priority for the SEC’s examination division for this year.
The securities regulator said that its examination division would examine RIAs and broker-dealers that are using new practices or employing emerging financial technologies.
This includes online and technological solutions for meeting the demands of marketing and compliance and for servicing investor accounts.
It had also been reported on Wednesday that the Securities and Exchange Commission (SEC) has launched a probe into the Kraken crypto exchange for offering unregistered securities.
The SEC and its chairman, Gary Gensler, have already been criticized for using the regulation by enforcement approach.
According to Armstrong and others, this approach is only going to drive companies offshore and would not do any good.
However, politicians and regulators, such as US Senator Elizabeth Warren, have asserted that a ‘strong SEC’ scares the crypto industry.
They have also asserted that the agency needs to do more for regulating the crypto market. Armstrong said that they should allow new technologies to grow in the country and not stifle them with a lack of clear rules.
He added that in the case of Web3 and financial services, it is a national security issue that they are developed in the US and not elsewhere.
An hour after Armstrong had posted his initial thread on Twitter, Coinbase also officially tweeted in support of crypto staking.
It said that the practice has the potential of speeding up the process of digital payments’ adoption globally because it does not involve establishing expensive centralized intermediaries.
Coinbase said that staking would only work successfully if it remains neutral, decentralized, and global. It should be noted that SEC is not the only regulatory body wading into the crypto space.
There are other US agencies that are also delving in, which include the Commodity Futures Trading Commission (CFTC), the FTC, the Justice Department, and even the Internal Revenue Service (IRS).
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