Brian Armstrong, the CEO of Coinbase, has expressed his worries over rumored plans by the U.S. Securities and Exchange Commission (SEC) to ban retail investors from engaging in cryptocurrency staking. Armstrong took to Twitter on Wednesday, saying that such a move would be a “terrible path for the U.S.”
The SEC declined to comment on the matter. However, SEC Chairman Gary Gensler has previously hinted that cryptocurrencies that allow staking could be classified as securities under the Howey test, even though ether has been designated as a commodity by the Commodity Futures Trading Commission (CFTC).
Staking is a popular income-generating technique at the heart of many blockchains, including Ethereum. According to a report by Staked, a noncustodial staking service provider, the value of staked assets reached $42 billion in the fourth quarter of 2022, with annualized staking rewards of $3 billion. This figure includes both retail and institutional investors.
The Proof of Stake Alliance (POSA) opposes the assertion that staking constitutes an unregistered security. Alison Mangiero, the executive director of POSA, stated that staking is a way for anyone to participate in providing security for proof-of-stake networks, and that regulatory action that goes against this would hinder America’s efforts to foster domestic technological innovation.