Despite the recent crackdown by the U.S. Securities and Exchange Commission (SEC) on staking services offered by centralized providers, Coinbase has reiterated to customers that its staking services will continue, and “may actually increase.”
In a new customer email, highlighted by popular traders such as @AltcoinPsycho via Twitter on March 10, Coinbase outlined its updated staking terms and conditions starting from March 29.
New email from Coinbase regarding staking:
“Your staked assets will continue earning rewards, no action is required… You earn rewards from the protocol, not Coinbase”
Coinbase basically telling the SEC to take a hike? pic.twitter.com/ckAAaZXsQb
— Psycho (@AltcoinPsycho) March 10, 2023
Under the fresh terms, Coinbase explicitly explains that users earn rewards from the decentralized protocols, and not directly from the exchange itself.
“Coinbase acts only as a service provider connecting you, the validators and the protocol,” as opposed to offering a share of its own staking rewards,” the email reads, adding that:
“Your staked assets will continue earning rewards. If you want to continue staking, no action is required. Your staking rewards may actually increase.”
While the notion of Coinbase’s staking rewards continuing and potentially increasing may irk the SEC, the clear distinction around protocol rewards and being a service provider appears to be a move to avoid any potential gray area issues that competing exchange Kraken recently faced.
As Cointelegraph reported, Kraken agreed to pay a $30 million settlement on Feb. 9 for allegedly failing to register its staking-as-a-service program with the SEC. As part of the deal, Kraken can no longer offer staking services in the U.S.
A key part alleged in the SEC’s complaint, was that users lost control of their tokens by offering them to Kraken’s staking program, and investors were offered “outsized returns untethered to any economic realities” with Kraken also able to pay “no returns at all.”
Coinbase has argued on multiple occasions that its staking services are fundamentally different to Kraken’s. CEO Brian Armstrong also stated on Feb. 10 that the firm happily defend its position in court “if needed.”