A U.S. Securities and Exchange Commission ban on crypto staking would be a “terrible path” for the industry, Brian Armstrong, chief executive and co-founder of crypto exchange Coinbase
In a series of Tweets on Wednesday night, Armstrong suggested that he’d been hearing rumors that regulators would like to get rid of crypto staking, which is a way for crypto holders to earn passive income by directly running open crypto networks. Staking lets users earn cryptocurrency as a reward for using existing holdings to verify the accuracy of transactions on an underlying blockchain network.
“We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules,” said Armstrong. “It’s a matter of national security that these capabilities be built out in the U.S.”
Armstrong argues that “regulation by enforcement doesn’t work,” and it’s what encouraged FTX, the crypto exchange that filed for bankruptcy in November, to operate offshore. FTX operated in the Bahamas.
The SEC has been cracking down on crypto companies recently, with an open investigation into Coinbase Global, and a new investigation into Kraken, a crypto exchange that allows customers to trade Bitcoin
and other cryptocurrencies, over unregistered securities. In January, it also hit Genesis and Gemini, two popular crypto exchanges, with charges related to unregistered securities.