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Coinbase stepped up its game in the recent staking battle started by the Securities and Exchange Commission (SEC). The popular digital trading platform is moving to the forefront and has vowed to be the best warrior in the fight against betting practices.
Coinbase Becomes a Scout Colonel
Not long ago, the SEC attacked Kraken, a popular crypto exchange based in Northern California. As part of the court settlement, the company promised to stop all of its betting services. It would also pay the agency over $30 million in fees. The move had dire consequences for the crypto space, as everyone feared that this would turn into something much bigger and that the US was now waging one of its biggest fights against crypto staking.
As a result, the price of bitcoin and many other leading digital assets is falling at the time of writing. However, some entities are not giving up easily, one of which is Coinbase. The trading company has made it clear in recent blog and social media posts that betting services are not securities.
It is also said that the offering provided by Kraken is more in line with the yield product and very different when compared to Coinbase’s offering. The company says its customers are unlikely to face any harm.
Brian Armstrong – CEO of Coinbase – is willing to go further while defending the respectability of the betting industry, saying in a recent statement:
We will be happy to defend this in court if required.
Staking is a process whereby crypto holders lock up their assets for a certain period of time to help keep a particular blockchain network running properly. From there, they get a digital reward for their assets as long as they don’t take them back.
Coinbase’s chief legal officer Paul Grewal has backed the company’s assertion that they do not offer a yield product. He mentioned:
Coinbase staking services are fundamentally different and not securities… The purpose of securities law is to correct information asymmetry, but there is no information imbalance in staking, because all participants are connected on the blockchain and [can] validate transactions through a community of users with equal access to the same information.
He further mentions that staking is not an investment because anyone who takes part in the process is not giving up something for a separate item. He says:
They have exactly the same thing as before… Rewards are simply payments for validation services provided to the blockchain, not a return on investment.
What’s the SEC’s Problem?
In its fight against Kraken, the SEC claims to have taken issue with the idea that they did not warn users of any potential risks.
The company also advertises investment returns as high as 21 percent.
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