The Coinbase CEO, Brian Armstrong, said on twitter that crypto staking services are not securities and the company will “happily defend” it if needed.
The Coinbase, one of the biggest cryptocurrency exchanges, has stood against the US Securities and Exchange Commission on crypto staking services so far. However, Kraken exchange settled with SEC and ended the crypto staking on its platform. Conversely, Brain Amstrong denied the US SEC’s claim on staking for the past several days.
Paul Grewal, the exchange’s Chief Legal Officer, indicated in a blog that the company’s staking services do not fulfil the Howey test requirements and hence should not be deemed securities. This statement gave relief to crypto stakers to some extent.
In addition, Grewal contends that staking does not meet the four components of the Howey test: monetary investment, shared enterprise, a high probability of reward, and the contributions of others.
As crypto staking services are decentralized and not entrepreneurial, users always maintain ownership of their assets which does not make them an “investment.”
Also Read: Coinbase CEO Criticises Rumours of the SEC Prohibiting Crypto Staking
Negative Impact on Share Prices
Due to the Kraken settlement with the SEC, Coinbase’s share price came under pressure. Meanwhile, the bloodbath occurred when bears dumped aggressively on 09 February, as it declined 14.13% (the largest fall in 2023). On a weekly note, stock stays lower at $60, down by 23.5%.
