Brian Armstrong, CEO of the largest cryptocurrency exchange in the US, Coinbase, has expressed his commitment to defend the company’s crypto staking services in court against allegations that they should be classified as securities.
In a recent tweet, Armstrong shared a blog post written by Paul Grewal, the chief legal officer of Coinbase, which stated that the staking services offered by the exchange do not meet the criteria of a security according to the Howey test, used by the US Securities and Exchange Commission (SEC) to determine whether an investment contract is a security.
Grewal argued that crypto staking services are decentralized, with users always retaining ownership of their assets, and therefore cannot be considered an “investment.”
He also highlighted that classifying staking services as securities would limit US consumers’ access to these services, forcing them to seek out unregulated offshore platforms instead.
The SEC recently fined US-based crypto exchange Kraken $30 million for failing to register its crypto staking programs, which led to the closure of its on-chain staking services for US users.
The SEC is also reportedly planning to sue Binance USD (BUSD) stablecoin owner and issuer Paxos Trust Company, as it considers the stablecoin to be an unregistered security.
Coinbase’s CEO and chief legal officer’s bold stance on the classification of staking services as securities highlights the growing concern among industry leaders regarding the regulatory future of the cryptocurrency industry.
It remains to be seen how the SEC will respond to these latest developments and the potential impact they may have on the wider crypto community.