Brian Armstrong, CEO of Coinbase, expressed concern about rumors that the U.S. Securities and Exchange Commission (SEC) may eliminate cryptocurrency staking for retail customers in the United States. Armstrong insisted that “staking is not a security” and that the trend allows users to “participate directly in running open crypto networks.”
Coinbase CEO Brian Armstrong said he has heard rumors that the U.S. Securities and Exchange Commission (SEC) plans to eliminate cryptocurrency staking for retail customers in the U.S. Armstrong shared his views on Twitter and stated that he doesn’t believe the top securities regulator should ban cryptocurrency staking in the country. “I hope that’s not the case,” Armstrong wrote, “as I believe it would be a terrible path for the U.S. if that were allowed to happen.”
Sharing a “primer” on the subject written by Paradigm, Armstrong stressed that staking is not a security. “Staking is a really important innovation in crypto,” the Coinbase CEO said. “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.”
Armstrong argued that new technologies need to be fostered, not stifled, in the U.S. and that it is important for the country to have clear rules for financial services and Web3 industries for national security reasons. “Regulation by enforcement doesn’t work,” Armstrong said. “It encourages companies to operate offshore, as happened with FTX.” Not everyone agreed with Armstrong, as some quickly criticized staking and decentralized finance (defi). “It’s almost like defi and staking isn’t decentralized,” one person quipped in Armstrong’s Twitter thread.
Others poked fun at SEC Chairman Gary Gensler with a picture that included a quote that said: “Guess it’s time for more protection.” Another individual tweeted, “Realistically, the Howey test is so broad that pretty much everything is a security. The real test is whether the SEC wants to/feels like it can regulate the thing.” Armstrong hopes that the industry will work together to establish clear rules and “sensible solutions” that protect consumers while also “preserving innovation and national security interests” in the country.
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