It’s been a complicated few months for the US cryptocurrency market. On June 6th, the US Securities and Exchange Commission (SEC) decided to file a lawsuit against Coinbase alleging that the exchange had been operating as an unregistered security broker since 2019 and perhaps even earlier. This was followed by regulatory bodies of 10 states launching their own legal proceedings almost immediately following the SEC’s action. In response, Coinbase has recently announced it will be temporarily halting customer usage of its staking services in California, New Jersey, South Carolina, and Wisconsin.
Coinbase: Leading US Crypto Exchange and Staking Service Provider
Coinbase is one of the largest crypto exchanges in the US and one of the most significant institutional staking service providers, accounting for close to 10% of all Ethereum staking according to Nansen’s database dashboard. Kraken‘s suspension decision contrasts with Coinbase’s stance on staking services not being securities under the law.
In their blog post, the company highlighted the four states where the suspension would be in effect. Kraken’s staking services are suspended for most US customers, except those from six states where it’s still available. This implies that customers from these states can continue to participate in staking activities on the Coinbase platform. Despite the suspension, Coinbase reassured its customers that they should still be able to see returns on their staked assets. The suspension does not prevent their assets from growing or their older rewards from becoming available. This means that customers’ staked assets can continue to earn rewards and generate returns, even during the period of suspension.
Advocacy for Americans’ Right to Stake Digital Assets
Coinbase’s decision also echoes the SEC’s settlement with another cryptocurrency exchange, Kraken, last February. Kraken reached a $30 million deal with the SEC and suspended staking services for US customers amid regulatory concerns. Despite the SEC’s action against Coinbase, the exchange’s stock prices have surged, reaching a new yearly high of over $100. Coinbase’s partnership with BlackRock and Fidelity in traditional finance may contribute to their optimistic outlook with US regulators.
Despite the suspension in four states, Coinbase remains optimistic about maintaining good relations with US regulators. They continue to advocate for Americans’ right to stake digital assets, arguing it shouldn’t be classified as financial securities. Until then, they will strictly follow all orders set by the legal authorities to ensure federal compliance.
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