SEC’s ‚Staking Ban‘: Not What You Think!

• The SEC is ramping up its efforts to regulate crypto exchanges, with staking services being the latest casualty.
• Exchanges like Coinbase and Kraken have been providing staking services to retail customers but are now facing legal action from the SEC.
• SEC Chair Garry Gensler believes investors deserve more transparency when it comes to these products and their returns.

SEC’s Regulatory Push on Staking Services

The US Securities and Exchange Commission (SEC) has been working hard to regulate crypto exchanges since the catastrophic FTX collapse. Staking services are one of the latest casualties in this regulatory push, as exchanges like Coinbase and Kraken face legal action for offering these services to retail customers.

What is Crypto Staking?

Crypto staking is a way of securing proof-of-stake networks like Ethereum while also earning rewards for locking up tokens. To mitigate the need for large amounts of capital, users can pool their tokens into decentralized staking pools – or stake them with exchanges. For crypto exchanges, staking services have become an essential source of revenue as trading volumes dropped.

Coinbase CEO’s Warning

Coinbase CEO Brian Armstrong sounded the alarms over „rumors“ about an upcoming ban on crypto staking from the SEC. He argued that such a ban would be a „terrible path“ for the US, given that blockchain rewards accounted for 11% of the revenue in Q3 of 2022, up from 8.5% in Q2.

Genser: Investors Deserve Transparency

On Friday, SEC Chair Garry Gensler explained why his agency was taking steps to rein in staking services. He said that exchanges advertise returns on these products without giving investors enough information about what they’re doing with their tokens – something he believes needs to change if investors are going to trust these products.

SEC’s ‚Staking Ban‘ Not What You Think

Rather than banning crypto staking outright, what the SEC is looking at doing is introducing more transparency into how these products work and how they generate returns for investors – something which could ultimately make them more decentralized and trustworthy for everyone involved.