Brian Armstrong, the CEO of Coinbase, the largest cryptocurrency exchange in the United States, has announced that the company is ready to defend its crypto staking services in court.
In a recent tweet, Armstrong shared a blog post written by Paul Grewal, Coinbase’s Chief Legal Officer, stating that Coinbase’s staking services are not securities and will happily defend this in court if needed.
In the blog post, Grewal stated that staking does not fall under the classification of securities as per the US Securities Act and the Howey test, which are used by the US Securities and Exchange Commission (SEC) to determine whether an investment contract is a security.
According to Grewal, the decentralized nature of staking services, where users always maintain ownership of their assets, does not qualify as an “investment” and does not meet the standards of the Howey test.
Grewal also warned that classifying crypto staking as securities would prevent US consumers from accessing these services, driving them towards unregulated offshore platforms.
This statement comes after the SEC fined the US-based cryptocurrency exchange Kraken $30 million for failing to register their crypto staking programs. In response, Kraken has announced the closure of its on-chain staking services for US users.
Additionally, the SEC is reportedly planning to sue Binance USD (BUSD) stablecoin owner and issuer Paxos Trust Company as it regards the stablecoin as an unregistered security.
This highlights the growing regulatory scrutiny in the crypto industry and the importance of companies like Coinbase taking a stand to defend their services.
