Brian Armstrong – the man in charge of Coinbase, arguably the biggest and most popular digital currency exchange in the United States – has warned that the Securities and Exchange Commission (SEC) is likely to crack down on a process called staking, which could wind up hurting tokens such as ETH.
Coinbase Says No Staking Could Be Devastating
In a recent statement, Armstrong said that should the SEC decide against the practice of staking for retail investors, this could have profoundly negative outcomes for the crypto space. Staking refers to a process in which users lend out their tokens and lock them up for set periods. During this time, they earn interest on their assets so long as the final balances aren’t paid in full.
To participate, individuals known as “validators” must lock up at least 32 ether tokens, which at the time of writing, amount to roughly $52,000. Coinbase is itself a validator and has allowed the staking process to continue by opening it up to retailers in recent years. Its services permit them to engage in staking at no minimum amount, thus ensuring that everyone can take part in the process and opening the staking pool up to more people. This gives them chances they otherwise would not be privy to.
The SEC and its leader Gary Gensler have long been out to stop crypto in its tracks, and Armstrong thinks the organization will try stomping on the process. On social media, he issued the following warning:
We’re hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen… Staking is a really important innovation in crypto. 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.
The Company Can’t Take Any More Hits
No doubt Coinbase would like crypto staking to continue given it’s concerned about the fate of the industry. However, the exchange has also been experiencing a very tough time as of late, and without staking in the mix, it would likely lose a good chunk of business and thus be brought to its knees following a potential ban. Right now, the company collects a 25 percent fee on all staking transactions taking place within its confines.
In addition, the crypto winter has come down particularly hard on the trading platform. The company is so tied to BTC that with the price falling the way it has, its stock shares have not done well, and the firm has had to let go of thousands of employees in the process from last summer through now.