Coinbase has reassured users that its staking services will continue and “may actually increase” despite the recent crackdown by the U.S. Securities and Exchange Commission (SEC) on staking services provided by centralized providers.
Coinbase detailed its modified staking terms and conditions beginning on March 29 in a new client email, which was noticed by well-known traders like @AltcoinPsycho through Twitter on March 10.
In the updated terms, Coinbase makes it clear that users receive benefits through decentralized protocols rather than the exchange itself. Instead of giving a portion of its own staking rewards, Coinbase “acts merely as a service provider linking you, the validators, and the protocol,” according to the email, which also states that “Your staked assets will continue collecting rewards. No more action is necessary if you want to keep staking. Your staking profits might even rise.
The SEC may not like the idea of Coinbase’s staking rewards continuing and possibly rising, but the obvious separation between protocol awards and being a service provider seems to be an attempt to avoid any potential gray area problems that rival exchange Kraken recently encountered.
According to Cointelegraph, Kraken agreed to pay a $30 million settlement on February 9 for allegedly not informing the SEC about its staking-as-a-service program. The agreement prohibits Kraken from providing staking services in the United States.
Users who gave their tokens to Kraken’s staking program allegedly lost control of them, investors were promised “outsized returns untethered to any economic realities,” and Kraken was even able to pay “no returns at all,” according to the SEC’s lawsuit.
Coinbase has stated repeatedly that the staking services it offers are fundamentally distinct from those offered by Kraken. On February 10, CEO Brian Armstrong added that the business would “if needed” gladly defend its stance in court.
