Crypto exchange executives Coinbase are defending their cryptocurrency listing services, arguing that they cannot be classified as securities and threatening to take the case to courts in the United States.
Brian Armstrong, CEO of Coinbase, tweeted that the company “will defend this in court if necessary.” The move follows an agreement reached by crypto exchange Kraken with the Securities and Exchange Commission (SEC) on Feb. 10 to stop offering services or betting programs to customers in the country.
According to the SEC, Kraken failed to “register the offer and sale of its cryptoasset staking program as a service,” which the commission has now qualified as a security. In addition to the suspension of service, Kraken agreed to pay $30 million in damages for early repayment, prejudgmental interest, and civil penalties.
Coinbase staking services are not securities. We will gladly defend this in court if necessary.https://t.co/GtTOz77YV3
— Brian Armstrong (@brian_armstrong) February 12, 2023
Coinbase General Counsel Paul Grewal commented on the matter in a blog post. declaring that “the bet is not a security either under the US Securities Act or under the Howey test.” Grewal also noted:
“Attempting to impose securities law on a process such as placing bets does nothing to help consumers, and instead imposes overly aggressive requirements that will prevent U.S. consumers from accessing basic crypto services and push users to offshore, unregulated platforms.”
Grewal argues that the bet does not meet the four elements of the Howey test: investment of money, common enterprise, reasonable expectation of profit, and effort by others. “The Howey test is taken from a 1946 Supreme Court case, and there will be a separate discussion about whether this test makes sense for modern assets such as cryptocurrencies,” he noted.
“The purpose of the securities law is to correct the imbalance of information. But there is no imbalance of information in staking, since all participants are connected to the blockchain and can confirm transactions through a community of users with equal access to the same information. .” Further, the performer wrote:
“Blockchain technology has the potential to drive significant economic growth in the US, and staking is a safe and important aspect of this technology. […] But forced regulation that does nothing to help consumers and pushes innovation abroad is not the answer. The right way to bet. “
The SEC’s decision to staking cryptocurrencies has drawn criticism. In a statement titled “Kraken Down,” Commissioner Hester Pierce publicly chided her own agency for shutting down the Kraken betting service. Pierce argued that forced regulation “is not an efficient or fair way to regulate” an emerging industry.
Credit : cointelegraph.com
