Coinbase, the crypto exchange, has said it would continue to provide its staking services, even though the Securities and Exchange Commission (SEC) is working on a plan to clamp down on purported unregistered securities offers made via staking incentive schemes.
An email by the firm states that “Coinbase serves merely as a service provider linking you, the validators, and the protocol” instead of giving a portion of its staking rewards. It also further states that Coinbase does not provide a share of its staking rewards.
Coinbase might instead expand its staking services
Coinbase has assured its user base again that its staking services would continue and “may actually expand,” despite the recent crackdown on staking services provided by centralized providers by the United States Securities and Exchange Commission (SEC).
On Mar. 10, popular traders shared screenshots of news emails sent by the exchange. Coinbase said it would modify its staking terms and conditions beginning on Mar. 29.
Coinbase’s most recent terms clarify that the decentralized protocols, not the exchange itself, are the source of any incentives accrued by platform users.
Although the Securities and Exchange Commission (SEC) may be irritated by the idea of Coinbase’s staking rewards continuing and possibly increasing, the clear distinction around protocol rewards and being a service provider appears to be a move to avoid any potential grey area issues that Kraken, a competing cryptocurrency exchange, recently encountered.
Coinbase: Kraken’s staking is different from ours
Kraken reached an agreement on Feb. 9 to pay a settlement of thirty million dollars to satisfy allegations that the company failed to register its staking-as-a-service program with the SEC. As a condition of the agreement, Kraken cannot continue providing staking services in the United States.
The SEC’s complaint alleges users lost control of their tokens when they offered them to Kraken’s staking program. Investors were provided outsized returns untethered to economic realities, with the possibility that Kraken could also pay no returns. One of the primary allegations in the complaint is that Kraken was able to deliver no returns at all.
Coinbase, who has been firm on defending staking, has said several times that it believes its staking services to be fundamentally distinct from those offered by Kraken. Moreover, on Feb. 10, CEO Brian Armstrong declared that the company would gladly defend its stance in court “if necessary.”