By Curtis Dye
Coinbase CEO Brian Armstrong reinforced his conviction in the business’s authenticity and utility of staking services in a tweet on February 12. He said in his statement that the company’s staking services are not securities and that the business is ready to defend its stance in court if required.
Staking does not fall under the Securities Act of 1933
Paul Grewal, chief legal officer of Coinbase, said on the company’s blog that staking does not meet the requirements of a Howey test or the Securities Act of 1933. The SEC applies the Howey test to investment contracts to assess whether or not they are securities.
Grewal went on to clarify that Coinbase’s staking services do not fit the requirements of an investment contract as defined by the Howey Test. He emphasized that staking does not entail a joint effort, does not guarantee results, and does not need monetary investment.
Also read:Grewal, in particular, contended that if securities laws were applied to crypto staking, American consumers would be forced to utilize unregulated, foreign sites.
In this discourse, the Securities and Exchange Commission fined Kraken, a bitcoin exchange located in the United States, US$30 million earlier this week. This fine was issued because Kraken failed to declare the offer and sale of its crypto-staking plans.
Kraken has scrapped its plans to stake in the US
As a result, Kraken canceled its intentions for staking in the United States without replying to the allegations. Furthermore, the SEC announced its intention to press charges against cryptocurrency business Paxos Trust Co. for breaching investor protection rules when it launched the Binance USD (BUSD) stablecoin.
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