Paul Grewal, the Chief Legal Officer at Coinbase, has made a statement following the US Securities and Exchanges Commission (SEC) settlement with Kraken over staking rewards. Grewal stated that “we don’t play games” and that the public should not have to understand regulator expectations through court complaints. He also made it clear that managed staking is not a security in his view, saying staking is not a security because validators form no commonality and expect rewards primarily from their own efforts and funds.
Staking Services Halted for US Customers
Kraken has ceased providing staking services to US customers due to the SEC settlement. However, it is unclear how the staking services will be stopped. There may be an option for Kraken to stop staking services for new customers while continuing offers for existing customers in Europe and the rest of the world.
Coinbase Continues Staking Services in the US
Coinbase, a publicly traded company, continues to offer staking services in the US. Grewal’s view that staking is not a security means Coinbase would have to go to court if the SEC approached, unless action was taken by their shareholders.
Kraken Settles with SEC, Coinbase Prepares for Battle
Kraken has opted for a settlement with the SEC, despite being in the midst of a regulatory attack on the crypto industry. The founder of Kraken, Jesse Powell, explained the decision by saying the company calculated risk-adjusted returns, taking into account their financials and the current bear market.
In contrast, Coinbase has billions in cash and is preparing for a potential battle with the SEC. The current SEC chair is following a strategy of managed chaos, causing confusion and fear in the industry. However, Coinbase and Silicon Valley are aware of the strategy and hope it will backfire as it did for Bush and Putin.