Despite SEC scrutiny, Coinbase says staking will continue

Despite a recent crackdown by the U.S. Securities and Exchange Commission (SEC) on centralized providers’ staking services, Coinbase has reassured consumers that its staking services would remain and “may even rise.”

In a recent client communication, highlighted by prominent traders such as @AltcoinPsycho on Twitter on March 10th, Coinbase revealed its revised staking terms and conditions commencing March 29th.

With the updated rules, Coinbase specifies plainly that customers receive incentives via decentralized protocols and not the exchange itself.

According to the email, “Coinbase works merely as a service provider linking you, the validators, and the protocol,” as opposed to contributing a portion of its staking rewards.

Adding that:

“Your staked assets will continue earning rewards. If you want to continue staking, no action is required. Your staking rewards may actually increase.”

Although the possibility of Coinbase’s staking incentives persisting and maybe expanding may irritate the SEC, the obvious separation between protocol awards and being a service provider looks to be an attempt to avoid the gray area concerns that Kraken has encountered.

Kraken reportedly agreed to a $30 million settlement on February 9 for allegedly failing to register its staking-as-a-service business with the Securities and Exchange Commission.

As part of the agreement, Kraken cannot provide staking services in the United States.

A fundamental allegation in the SEC’s lawsuit was that users lost ownership of their tokens when they handed them over to Kraken’s staking platform, and investors were given “outsized profits untethered to economic reality” or “no returns at all.”

Several times, Coinbase has stated that its staking services are fundamentally distinct from Kraken’s.

Moreover, CEO Brian Armstrong indicated on February 10 that the company will defend its stance in court “if necessary.”