### Coinbase's Chief Executive Officer Brian Armstrong has made it clear to the public that the company does not consider their staking services to be securities, and they intend to vigorously defend this position in court if necessary.

The SEC has already taken enforcement actions against companies (i.e. Kraken) for offering unregistered securities or investment contracts, and has suggested that certain staking services could be subject to securities regulations if they involve the sale of investment contracts.



Companies operating in the cryptocurrency space are consulting with legal experts to ensure they are in compliance with applicable laws and regulations, and to consider the potential risks and benefits of various staking arrangements for their users.



However, small companies facing SEC actions do have the ability to contest the agency's findings and defend themselves in court as litigation can be costly and time-consuming. Some smaller or less financially stable companies may struggle to mount a vigorous legal defense, which can put them at a disadvantage in SEC enforcement proceedings, therefore a settlement in favor of the SEC is the most logical path to continue their business operations.



With the Securities and Exchange Commission uncontrollable desire to regard everything as unregistered securities within the crypto space, companies such as Coinbase may be gearing up for a potential lawsuit if the government agency comes after them.


 <blockquote className="twitter-tweet"><p lang="en" dir="ltr">Coinbase's staking services are not securities. We will happily defend this in court if needed.<a href="https://t.co/GtTOz77YV3">https://t.co/GtTOz77YV3</a></p>— Brian Armstrong (@brian_armstrong) <a href="https://twitter.com/brian_armstrong/status/1624829368915890176?ref_src=twsrc%5Etfw">February 12, 2023</a></blockquote>

According to the article made by Coinbase, staking does not qualify as a security under either the US Securities Act nor the Howey test, which is the method that the SEC employs to determine whether or not an investment contract qualifies as a security. Due to the fact that the Howey test was based on a decision made by the Supreme Court in 1946, there is a significant amount of debate on whether or not it is applicable to contemporary assets such as cryptocurrency.



In conclusion, the actions of regulatory agencies like the SEC can impact the pace and direction of innovation in the crypto space. Regulatory clarity can actually help support the growth and maturation of the crypto industry by establishing clear rules of the road and deterring fraudulent or manipulative practices rather than regulation by enforcement.


 

Coinbase's Chief Executive Officer Brian Armstrong has made it clear to the public that the company does not consider their staking services to be securities, and they intend to vigorously defend this position in court if necessary.

Wed Feb 15 2023

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Wed Feb 15 2023 Coinbase CEO To Defend Its Staking Services If The SEC Pursues Them

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Wed Feb 15 2023

Coinbase CEO To Defend Its Staking Services If The SEC Pursues Them