• Coinbase has addressed the issue of whether its staking products should be considered securities by the SEC.
• The Chief Legal Officer claimed that none of the four criteria of Howey’s test are met, making them not a security.
• Crypto staking rewards are received for providing validation services to the blockchain and do not constitute a return on investment.
Coinbase Claims its Staking Products Are Not Securities
Coinbase has addressed the matter of whether its crypto staking services should be treated as securities by the US Securities and Exchange Commission (SEC). According to Paul Grewal, Chief Legal Officer at Coinbase, their products should not meet any of Howey’s four criteria – efforts of other parties, investment of money, expectations of profit, and common enterprise – thus they are not securities.
The Four Criteria Of Howey’s Test
The SEC applies Howey’s test to determine whether an asset is a security or not. The four criteria include: effort by other parties; investment in money; expectation of profits; and common enterprise. According to Grewal, none of these elements are applicable when it comes to crypto staking on Coinbase. He stated that customers retain full ownership over their crypto funds while participating in staking and they “own exactly the same thing they did before”. Additionally, crypto assets are staked on decentralized platforms which eliminates the element of common enterprise as well.
Staking Rewards Do Not Constitute Return On Investment
Grewal also argued that rewards received from crypto staking are payments for validation services provided to blockchains rather than returns on investments. Therefore, this does not fall under the category of reasonable expectations for profits either. In conclusion, he believes that Coinbase’s products do not meet any criterion set forth by Howey’s test and therefore cannot be classified as securities in any way.
COIN Slumps 22% Weekly
All eyes have been on the SEC lately due to Kraken having to settle with regulators over offering certain crypto staking services in States earlier this year which raised concerns about Coinbase possibly having to do so too if their products were identified as securities as well but with this latest statement it seems like there is no risk in this area right now at least according to Coinbases assessment. Despite this COIN has still slumped 22% weekly despite all positive news surrounding cryptocurrency lately including Bitcoin hitting new all-time highs almost every day recently along with Ethereum following suit shortly after gaining ground above $1 500 recently too which was an astonishing feat given ETH had been trading below $200 back in early 2020 during last years market crash caused by covid-19 pandemic fears initially..
In conclusion Coinbase is confident that its staking service offerings do not classify as securities according to Howey’s test criteria which means it should be safe from any repercussions from SEC although COIN still slumped 22% weekly despite recent bullish sentiment seen across most cryptocurrencies lately such BTC & ETH hitting new all time highs very frequently recently too .