Coinbase Not To Shut Down Staking Services Despite SEC Charges

Coinbase CEO Brian Armstrong said at the Bloomberg Invest Conference that the crypto exchange, despite facing legal challenges from state and federal regulators, will continue to offer its crypto staking service. Armstrong emphasised that Coinbase’s staking service, which contributes around 3% of its total net revenue, will operate normally while the court cases unfold.

The Securities and Exchange Commission (SEC) recently sued Coinbase, accusing the company of multiple violations, including the sale of unregistered securities. Additionally, a group of ten states, led by the Alabama Securities Commission, targeted Coinbase with allegations of violating state securities laws through its staking program.

Coinbase’s staking service plays a crucial role in the company’s strategy to diversify its revenue streams, which heavily rely on trading fees. While approximately 90% of Coinbase’s revenue in 2022 came from transaction fees, the extended bear market in the crypto industry has caused some investors to shy away from trading, leading to a decline in earnings.

To address concerns about the safety of user funds, Armstrong reassured that Coinbase is not vulnerable to a bank-run-like scenario, where users would rush to withdraw their funds. He stated that all funds are backed one-to-one and reassured that the company’s auditors, as part of its obligations as a public company, have verified this fact.