Coinbase CEO Armstrong Slams a Possible Ban on Crypto Staking
- Coinbase CEO Brian Armstrong believes banning retail staking will be bad for the industry.
- Armstrong called for collaboration in designing clear rules for the industry that promote innovation.
- The US Securities and Exchange Commission has strongly called for the regulation of cryptocurrencies in the US.
- Coinbase announced last year that it was under investigation by the SEC for its staking incentives program, among other things.
Brain Armstrong, the CEO and founder of crypto exchange Coinbase, has slammed possible plans to ban crypto staking in the United States. Armstrong, who has been in a war of words with the US Securities and Exchange Commission, said he heard rumours that the regulator intends to ban retail crypto staking
Armstrong believes such a move would be a “terrible path for the U.S. if that was allowed to happen.” The Coinbase founder tweeted that staking was “a really important innovation. 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.”
Armstrong went further to argue that staking was not a security, as claimed by regulators. He called for support to ensure “that new technologies are encouraged to grow in the US and not stifled by a lack of clear rules.”
Addressing the SEC’s growing push to regulate the crypto industry, the Coinbase founder noted that “regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX.”
Although Armstrong did not reveal the source of the rumors, his tweet went viral. While Armstrong’s tweet might surprise some of his followers, previous comments from SEC Chairman Gary Gensler have come to light. Gensler stated that cryptocurrencies that allow staking could be classified as securities under the Howey test despite being defined as commodities by the Commodity Futures Trading Commission (CFTC).
Gensler told reporters after a Congressional hearing in September 2022 that he was not referencing any specific cryptocurrency, adding that staking was “another indica that under the Howey test, the investing public is anticipating profits based on the efforts of others.”
The top four staked cryptocurrencies by market size account for almost $55 billion in staked assets, according to Staking Rewards, indicating that a national ban would be devastating to the nation’s crypto economy, which has already seen the departure of several crypto companies to more friendly zones.
The SEC is likely to target centralized parties that provide staking services rather than the technology itself, according to several industry experts who believe that a ban on staking would be a hopeless cause that would damage the regulator’s reputation.