coinedition.com
Earlier today, the co-founder and CEO of Coinbase Brian Armstrong divulged to his followers he has been hearing rumors that the SEC intends 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,” writes Armstrong in his latest Twitter post.
1/ 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.
— Brian Armstrong (@brian_armstrong) February 8, 2023
Staking, the tech entrepreneur explains, is an important innovation in crypto. “It allows users to participate directly in running open crypto networks,” argues Armstrong, adding that staking brings many positive improvements to the space including scalability, increased security, and reduced carbon footprints. For the uninitiated, staking is when users lock crypto for a predetermined period of time to help support the functioning of a blockchain.
Armstrong also believes that this type of regulation by enforcement, which the SEC is infamous for, does not work. He adds, in the thread, an article on why Ethereum’s staking model does not make ETH a security. Before concluding the post on a hopeful note, the CEO states:
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.
However, Armstrong’s post was mostly met with derision and memes. Especially vocal in his criticism was Charles Hoskinson, the founder of Input Output Global. “Ethereum staking is problematic,” begins Hoskinson. He argues that temporarily giving up assets to someone else to have them get a return looks a lot like regulated products. “Slashing and bonds [are] not so good. Non-custodial liquid staking on the other hand is like the mining pools we’ve used for 13 years.”
Hoskinson is of the opinion that locking funds, encouraging centralization, and poor protocol design hurts the whole industry. He ends his disapproval with: “It’s sad that all proof of stake protocols might get lumped together due to a fundamental misunderstanding about the actual facts of operation and design.”