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Brian Armstrong – the man in charge of Coinbase, arguably the largest and most popular digital currency exchange in the United States – has warned that the Securities and Exchange Commission (SEC) will likely crack down on a process called staking, which could end up hurting tokens like ETH.
Coinbase Says No Staking Can Be Ruinous
In a recent statement, Armstrong said that if the SEC decides against the practice of staking retail investors, it could have a very negative outcome for the crypto space. Staking refers to the process where users lend their tokens and lock them up for a certain period. During this time, they earn interest on their assets as long as the final balance is not paid in full.
To participate, an individual known as a “validator” must lock up at least 32 ether tokens, which at the time of writing, amounts to approximately $52,000. Coinbase itself is a validator and allowed the staking process to continue by opening it up to retailers in recent years. The service allows them to engage in staking without a minimum amount, thereby ensuring that everyone can take part in the process and open up the betting pool to more people. It gives them opportunities they would never have known about.
The SEC and its leader Gary Gensler have long been out to stop crypto in its tracks, and Armstrong thinks the organization will try to step on the process. On social media, he issued the following warning:
We heard rumors that the SEC wants to get rid of crypto staking in the US for retail customers. I hope that doesn’t happen because I believe it will be a bad road for the US if it is allowed to happen… Staking is a very important innovation in crypto. It allows users to directly participate in running an open crypto network. Staking brings many positive improvements to the space including scalability, increased security, and reduced carbon footprint.
The Company Can’t Take Any More Hits
Undoubtedly, Coinbase wants crypto staking to continue given the plight of the industry. However, the exchange has also been going through a very rough patch recently, and without staking the mix it is likely to lose a large chunk of business and thus to its knees following a potential ban. Currently, the company charges a 25 percent fee for all betting transactions that occur within its limits.
Moreover, the crypto winter has gone downhill on the trading platform. The company is so tied to BTC that with the price dropping the way it is now, its stock shares are not doing well, and the company has had to shed thousands of employees in the process from last summer to now.
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