Despite the U.S. Securities and Exchange Commission’s (SEC) recent crackdown on staking services offered by centralized providers, Coinbase has reiterated to customers that its staking services are here to stay and “may actually increase.”
On March 10, well-known trader AltcoinPsycho highlighted a new customer email via Twitter, with Coinbase outlining updated staking terms and conditions starting March 29. Under the new terms, Coinbase explicitly explains that users are rewarded from the decentralized protocol, not directly from the exchange itself.
“Coinbase acts only as a service provider connecting you, validators, and the protocol,” rather than offering its own stake rewards,” the email read, adding: “Your staked assets will continue to earn returns. If you want to continue staking, you don’t need to do anything. Your staking returns may actually increase.”
While the idea of Coinbase’s staking rewards continuing and possibly increasing might irritate the SEC, a clear distinction around protocol rewards and service offerings would appear to avoid any gray area issues like those faced by rival exchange Kraken recently.
Kraken agreed to pay a $30 million settlement on Feb. 9 for allegedly failing to register its staking-as-a-service program with the SEC. As part of the deal, Kraken can no longer offer staking services in the United States.
An important aspect of the SEC’s complaint is that users lose control of their tokens when using Kraken’s staking process. Investors received “excess returns unconstrained by any economic reality,” and Kraken was able to “pay no returns at all.”
Coinbase argues that its staking service is fundamentally different from Kraken's. Chief Executive Brian Armstrong said on Feb. 10 that the company would be happy to defend its position in court "if needed."
