Neosify - Buy, Stake & Earn Crypto
Neosify - Buy, Stake & Earn Crypto
Neosify - Buy, Stake & Earn Crypto

The Future of Ethereum Staking on Coinbase

As you have no doubt heard by now, Kraken was essentially forced by the SEC to shut down its staking services for U.S. customers and pay $30 million in penalties. While Kraken complied, they admitted no wrong-doing and simply "unstaked" customer assets. SEC chair Gary Gensler stated that providers of staking services don't provide customers with proper disclosures and that staking services should be registered with the SEC. This would imply that staking, and furthermore the underlying crypto assets, are indeed securities. The definition of cryptocurrencies has been a hot topic of debate; exactly how they are defined legally.

Coinbase, like Kraken, currently offers staking services. Specifically, customers can convert their Ethereum to ETH 2.0 and stake it to actively participate in the validation of transactions on the Ethereum network. If the SEC were to go after Coinbase for the same reasons they approached Kraken, it would have to be for different reasons. Gensler charged Kraken with not providing customers with proper disclosures. By all indications, the disclosures are pretty clear from Coinbase:


Additionally, customers are required by Coinbase to disclose certain personal identifying information (KYC) that ties customer identification to any rewards, or interest, earned on staked Ethereum. In other words, there are no ways around avoiding paying taxes on earned interest.

It would be foolish for the SEC to take action against Coinbase, with regards to Ethereum staking, as the company does everything in its power to inform its customers of the risks and rewards of staking. In fact, the platform makes it its mission not only to provide crypto trading services, but also empower customers through education. I would say that Brian Armstrong, CEO of Coinbase, says it best in the following Tweet:


That is just what the crypto industry needs: guidance from lawmakers, not hostility. How can companies that operate in the crypto industry be compliant, if they are left in the dark on what is in compliance and what is not?

For now, the future of Ethereum staking on Coinbase may be in jeopardy for U.S. customers. It is already prohibited in the state of New York. Full disclosure -- I myself have ETH staked on there and am concerned more about what lawmakers may do to jeopardize that position than the actual network risks. Ironically, all is laid out in the Coinbase disclosures. Such are the risks we take.

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dot com boomer - writing mostly on crypto, stocks, entertainment, etc.

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