Coinbase Argues Its Staking Services Are Not Securities, Criticizes SEC Regulatory Approach – Bitcoin News
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Coinbase, one of the largest cryptocurrency exchanges in the United States, recently argued that its staking services are not securities and criticized the U.S. Securities and Exchange Commission’s (SEC) approach to regulating digital assets.
Coinbase recently announced the launch of its staking services, which allow users to earn rewards by “staking” their cryptocurrency holdings. Coinbase’s staking services are currently available for Tezos (XTZ) and will soon be available for other digital assets, including Algorand (ALGO), Cosmos (ATOM), and Polkadot (DOT).
In a blog post announcing the launch of its staking services, Coinbase argued that its staking services are not securities and should not be regulated by the SEC. According to Coinbase, its staking services are not investments and do not involve the issuance of new securities.
“We believe that staking and similar activities, such as running a validator node or providing liquidity, are not the issuance of securities,” Coinbase wrote. “The SEC has not taken a formal position on the status of staking or similar activities, but we believe that our approach is consistent with both the spirit and the letter of U.S. securities law.”
Coinbase also criticized the SEC’s approach to regulating digital assets, arguing that the agency’s “overly broad interpretation” of the Howey test has “created uncertainty” in the market. The Howey test is a legal standard used to determine whether an asset is a security. Coinbase argued that the SEC’s approach has “stifled innovation” and “discouraged” companies from launching new products and services.
“We believe that the SEC should provide greater clarity on the application of the Howey test to digital assets and activities,” Coinbase wrote. “We hope that the SEC will develop a more nuanced approach to the regulation of digital assets that allows for innovation and growth while still providing necessary investor protection.”
Coinbase’s argument that its staking services are not securities and its criticism of the SEC’s approach to regulating digital assets is likely to be welcomed by the cryptocurrency community. Many in the industry have long argued that the SEC’s approach to regulating digital assets is overly broad and has stifled innovation. Coinbase’s stance is likely to be seen as a sign that the industry is pushing back against the SEC’s current approach.
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