The latest updates on Coinbase’s legal troubles provide an intriguing glimpse into the state of cryptocurrency regulations in the United States.
According to a blog post by Coinbase published on 14 July 2023, the U.S. Securities and Exchange Commission (SEC) and state regulatory bodies from ten states have raised allegations against Coinbase, centering around the crypto platform’s retail staking services. Authorities from states such as California, New Jersey, South Carolina, and Wisconsin have pressed for operational changes to Coinbase’s services, despite the platform’s transparent and safe handling of staking services for almost four years.
Coinbase staunchly disputes the allegations, asserting that staking is not an investment but a critical function of the crypto economy that benefits millions of global users. According to Coinbase, Staking doesn’t just form part of their business offering but is also a cornerstone of the crypto industry, and so, the company is committed to protecting access to staking for all.
The regulatory hurdles mean California, New Jersey, South Carolina, and Wisconsin customers will face temporary restrictions on staking additional assets through Coinbase. However, Coinbase has reassured that this won’t affect the vast majority of their customers, and the assets staked before the orders remain unaffected.
Coinbase continues to work with regulators and remains committed to preserving as many U.S. customers’ access to staking as possible. While taking the easier path of cutting off staking services in the ten states with proceedings against them might seem tempting, Coinbase believes such a move would be detrimental to their customers, the law, and the future of the crypto economy.
Coinbase goes on to say that the legal struggle sheds light on the importance of staking to the crypto economy’s survival and growth. Proof of Stake blockchains is becoming increasingly popular due to their openness, security, and environmentally friendly operation. Users actively participate in the network by staking their tokens to secure the blockchain, helping process transactions and create blocks rather than merely investing.
Coinbase argues that the implications of this case reach beyond the confines of Coinbase and that as digital payment use soars across the U.S., pushing staking to offshore entities could potentially leave customers less protected. The popular crypto exchange claims that the restrictions on staking could also result in Americans losing the economic benefits of the crypto economy to residents of other states or even overseas.
In the spirit of defending staking, Coinbase has extended an invitation to the crypto community to join the advocacy for pro-crypto policy.