Coinbase Suspends Algorand Staking Rewards Due To Regulatory Pressure• March 24, 2023 4:17 pm • Comments
Crypto exchange Coinbase revealed this week that it will no longer offer Algorand token rewards as of March 29.
The exchange did not provide any reason for why it had decided to suspend this service, but investors and speculators believe that it is due to the recent regulatory pressure from the SEC.
The SEC has recently sent Coinbase a Wells Notice where the agency warns that the exchange may be dealing with unregistered securities.
As a result, Coinbase is likely pressured now to reevaluate its portfolio of products and services in order to avoid conflict with the SEC.
Algorand’s staking rewards is probably one of those services that the company decided would pose a regulatory risk if it continued.
— Governor Zen.algo (@averagezen) March 17, 2023
According to Waden’s tweet, Coinbase informed Algorand about the sudden termination of rewards for ALGO tokens on March 22, as the crypto exchange evaluates its portfolio of products and services following a Wells notice issued by the United States Securities and Exchange Commission the same day.
The change does not affect the ALGO token trading and governance rewards for institutional investors, Waden added in the thread.
The claims have been denied by Coinbase. “The Algorand news is not related,” a spokesperson for the crypto exchange told Cointelegraph, asserting that halting ALGO rewards is not tied to recent regulatory developments:
“Coinbase works alongside asset issuers to provide rewards and continuously reevaluates our offerings to ensure the best customer experience. We have decided to discontinue Algorand (ALGO) rewards at this time.”
Of course, Coinbase denies the claim, but the reasoning provided certainly seems to make sense and many are supporting the Algorand CEO’s statements on the matter.
Coinbase had acted as a service provider for Algorand in order to pass rewards from Algorand’s staking program to Coinbase users.
Therefore, Coinbase made up a certain portion of people who used Algorand’s staking rewards, but there are still other ways to still earn from staking by using other blockchains such as Cosmos, Tezos, Ethereum, and Solana.
The SEC has also targeting staking programs in the past as it had targeted the crypto exchange Kraken for a similar service in the past.
As a result, it is clear that Coinbase is trying to avoid having a similar fate by taking proactive action right now.
Unfortunately, this does decrease the number of users in the staking program, but Algorand’s ecosystem continues to grow consistently despite the pressure.
— Kyle 🇺🇸 (@XRedPilled91) March 22, 2023
Coinbase has acted as a service provider for Algorand, connecting the user and the protocol and passing on rewards earned from staking. According to the exchange’s website, users can still earn staking rewards from the Ethereum, Cosmos, Tezos, Cardano and Solana blockchains.
The move involving Algorand comes as Coinbase’s staking service faces questions after crypto exchange Kraken in February agreed to pay $30 million in penalties and shut down its U.S. staking-as-a-service operation to settle U.S. Securities and Exchange Commission charges that it was selling unregistered securities.
At the time, SEC Chairman Gary Gensler warned other platforms to “take note,” hinting at possible further investigations into other U.S.-based crypto exchanges.
Coinbase has halted offering staking services for Algorand as regulatory pressure continues to mount from the SEC on the major exchange.
— DailyCoin (@ReadDailyCoin) March 23, 2023
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