On Friday, the cryptocurrency exchange suspended its steaming services in four of ten states (California, New Jersey, South Carolina and Wisconsin). Coinbase executives explained: the temporary suspension of steaking services followed an official warning from local regulators. All four U.S. states have laws that say such warnings are followed by lawsuits in court. Regulators from the other six states, Maryland, Vermont, Kentucky, Illinois, Alabama and Washington, have already filed lawsuits against Coinbase.
“Coinbase’s Earn product, through which COIN offers stacking rewards to retail customers, seems particularly vulnerable to being defined as a security in this context,” wrote banking analysts led by Mark Palmer.
Berenberg reminds us that steaking was one of the topics of discussion last Thursday during the first hearing in the SEC’s lawsuit against Coinbase.
“The commission’s arguments could gain support if any or all of the ten states that initiated litigation against COIN for its use of steering confirm: the program facilitates securities offerings,” the report said.
The SEC sued Coinbase in June, alleging that the trading platform was acting as an unregistered broker. Coinbase executives say: crypto asset-stacking services are not securities-related. And calls on the SEC to pursue a more sensible policy on digital currencies.
Coinbase CEO Brian Armstrong is set to hold a closed-door discussion about cryptocurrencies with Democrats in the House of Representatives on July 19. Armstrong is pushing for clearer rules and guidelines for the digital asset market.