Amid continuous and intense regulatory scrutiny which extends to staking services in the US, Coinbase in a blog post has argued and is ready to challenge the stance of the US Securities and Exchange Commission on staking services.
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Coinbase Ready to Argue With SEC About its Staking Services
For any product to be considered a security by the SEC, it needs to pass through the Howey test, the result will however be used to determine whether or not the product will be affected by the SEC security laws.
Coinbase in the blog post noted that the test comes from a Supreme Court case back in 1946, which makes it make sense to argue whether the test could be used for modern assets like cryptocurrency.
However the case, staking which the US SEC is looking to ban in the US, does not satisfy the four elements of Howey test which are; investment of money, common enterprise, reasonable expectation of profits, and efforts of others.
Citing the above conditions, Coinbase argued in its release that staking is not a security, and the crypto firm is however ready to challenge its stance in court should SEC insists.
“The purpose of securities law is to correct for imbalances in information. But there is no imbalance of information in staking, as all participants are connected on the blockchain and are able to validate transactions through a community of users with equal access to the same information.” Coinbase wrote in the post, adding that;
“Blockchain technology can spur significant economic growth in the US and staking is a safe and critical aspect of that technology. […] But regulation by enforcement that does nothing to help consumers and drives innovation offshore is not the answer. Getting it right on staking matters.”
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