• Coinbase has sent a petition to the SEC to explain why staking can’t be universally labeled as securities.
• The 18-page petition discusses securities law treatment of services related to validating proof-of-stake protocols and places Coinbase’s staking service outside the SEC’s jurisdiction.
• Coinbase is looking to the law and previous precedents in its defense, as there is no set legal framework in the U.S., and crypto regulation is being applied through the courts.
Coinbase Petitions SEC on Crypto Staking
Coinbase has sent a petition to the Securities and Exchange Commission (SEC) to explain why crypto staking should not be universally labeled as securities. This comes after Kraken paid a $30 million fine for its infringement of securities laws due to their staking services that caused them to shut down their operations.
Coinbase’s Core Staking Services Not Investment Contracts
The 18-page petition argues that services related to validating proof-of-stake protocols should not fall under the jurisdiction of the SEC, and thus Coinbase’s core staking services should not be considered investment contracts. According to Coinbase, users are rather giving up temporary use of their assets, and they still retain full control over these assets regardless of what the service provider does with them.
Precedent and Legislation Used in Defense
The document goes on further in defending why cryptocurrency staking should not be classified as securities by citing historical precedent and legislation examples. Despite acknowledging that some models may fit into this definition, it stands firm on its assertion that most do not qualify for this classification.
Crypto Regulation Applied Through Courts
As there is no set legal framework in place for cryptocurrencies within the U.S., regulation has been largely determined by court decisions concerning individual cases — such as what happened with Kraken — making it difficult for firms like Coinbase operating within this space from adhering strictly to these rules without running into any regulatory issues or fines themselves.
Coinbase remains committed in its defense against any potential claims from regulators by using past precedents, legislative measures, and other similar methods within their plea towards proving its innocence when it comes down to crypto stakings falling under securities laws or regulations — at least when considering Coinbase’s own specific case on this matter anyway