Brian Armstrong, CEO and founder of Coinbase (NASDAQ:COIN), took to Twitter yesterday to share his belief that crypto staking is doomed as regulators – the Securities and Exchange Commission (SEC) – will soon kill off the popular method of generating revenue for parked crypto. Currently, on Coinbase, Ethereum may be staked for a 4% return.
Armstrong said that if the SEC decides to terminate staking for retail investors, it would be a “terrible path” for the US.
4/ We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules. When it comes to financial services and web3, it's a matter of national security that these capabilities be built out in the U.S.
— Brian Armstrong (@brian_armstrong) February 8, 2023
“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.”
Armstrong went on to declare that staking is “not a security” as that could be the path for the regulators to deny platforms to allow staking.
“We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules. When it comes to financial services and web3, it’s a matter of national security that these capabilities be built out in the U.S.,” said Armstrong, adding that “Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX.”
While the SEC has vocally messaged its intent to curtail crypto, Congress is working in a different direction seeking to craft rules to enable digital asset innovation while protecting investors. So far, the SEC’s strategy of regulation by enforcement is winning the game.
