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On Wednesday afternoon, Brian Armstrong, the CEO of the cryptocurrency exchange Coinbase, published a Twitter thread claiming that the SEC may be moving to ban crypto staking for retail investors in the US. Armstrong stated that if this is true, he believes it would be a “terrible path” for the country to take.
SEC is Rumoured to Be Working on a Ban on Crypto Staking in the US
Brian Armstrong, the co-founder, and CEO of Coinbase revealed in a Twitter thread published on Wednesday afternoon that the Securities and Exchange Commission may be planning to remove the ability of retail investors in the US to participate in cryptocurrency staking. Armstrong also said that he believes it would, if the SEC is indeed planning such a move, be a “terrible path” to take.
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.
Coinbase’s CEO also expressed his belief that aggressive enforcement doesn’t work as it simply incentivizes companies to go abroad to avoid watchdogs—much like the now-collapsed FTX did when it chose The Bahamas for its headquarters. Armstrong, instead, says he is hoping that the crypto community can participate in creating sensible and clear rules for the industry, and added that new technologies need to be encouraged, not stifled, in the US.
SEC Plans to Crack Down On Crypto Even Harder In 2023?
While the Securities and Exchange Commission has been pursuing aggressive enforcement actions against the digital assets industry throughout 2022—to the point of being dubbed a “shakedown authority” by one US Congressman—there are indications it might increase its scrutiny even more in 2023. On February 7th, the Commission named “emerging technologies and crypto-assets” as one of the top priorities this year for its Division of Examinations.
Furthermore, while Chair Gensler has been receiving pushback from some US lawmakers for his harsh stance on digital assets throughout the previous year, the White House appears pleased with his agency’s actions. In a “roadmap to mitigate cryptocurrencies’ risks” published in late January, the Biden administration praised the SEC and the CFTC for the ways the watchdogs have been handling the industry. Furthermore, the document called on Congress to step up its efforts and provide regulators with clearer rules for managing the digital assets sector.
The SEC is also reportedly on the cusp of a settlement in its first high-profile probe of 2023. A report from Thursday indicates that the Commission is in the advanced stages of an investigation of the cryptocurrency exchange Kraken. The agency might also face its first major setback this year as many analysts as well as the company’s CEO now believe that Ripple has a fairly good chance of winning its long-lasting case against the SEC.