BREAKING: The SEC May Decide To Ban Crypto Staking Soon

February 10, 2023 4:17 pm Comments

Among industry insiders, it looks like the SEC is potentially looking at banning cryptocurrency staking for retail investors in order to “protect” them.

This comes after the fact that many cryptocurrency staking platforms have gone bankrupt during the past crypto bear market where many got accused of offering unregistered securities.

The CEO of Coinbase, Brian Armstrong, commented that the banning of staking could completely slow down the growth of the crypto industry.

As a result, all crypto investors should be against the idea of banning staking as it would eliminate a lot of useful financial products that are available to the public.

With that being said, the SEC has not publicly commented on this idea yet as the idea is so far just a rumor that has circled around from multiple online sources. reports:

The SEC declined to provide a comment on the issue and remains tight-lipped about the developments. No official announcement about banning staking has been made public at press time.

Armstrong stressed that staking is one of the most important sectors in the cryptocurrency industry. It allows investors the freedom to control their digital assets rather than going through banks and other centralized entities.

“Staking is a really important innovation in crypto. It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints,” he said.

Nonetheless, Armstrong cited that regulators need to come up with solutions and rules to make it easier for retail investors. “Hopefully we can work together to publish clear rules for the industry. And come up with sensible solutions that protect consumers while preserving innovation and national security interests in the U.S,” he said.

Historically, blanket bans on a new industry are often not the best approach when it comes to regulation or protecting investors.

The best approach would be to help educate users of staking platforms what the risks are and allow them to do their own research on what staking utilities actually make sense.

The banning of staking would likely affect many crypto companies within the space and all it would really do is just force these companies to operate outside of the United States.

That would just cause the US to lose a lot of talent within the crypto space and would likely make other regions of the world benefit instead.

After all, banning it in the US does not mean that crypto staking will cease to exist outside of the country.

As a result, many investors and speculators are hoping that the SEC will not actually take such drastic action when it comes to regulation given that they already have the reputation of over-regulating.

CoinDesk reports:

Alison Mangiero, the executive director of the Proof of Stake Alliance (POSA) told CoinDesk that her organization opposes any assertion that staking constitutes an unregistered security.

“Staking tends to get misconstrued with unrelated activities like lending, but staking is fundamentally a way for anyone to join in providing security for proof-of-stake networks,” Mangiero said.

“The existence of staking service providers allows everyday Americans to participate in staking, which democratizes network consensus and validation and is core to the continued growth of the global decentralized internet.

Any regulatory action that runs counter to this misunderstands the nature of staking, and hinders America’s ongoing efforts to foster domestic technological innovation.”

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