Coinbase said, “We strongly disagree with any claim that our staking services are securities,” in response to the claim that their services are considered securities.
Due to current legal actions filed by local authorities, major cryptocurrency exchange Coinbase has decided to temporarily prevent users in four jurisdictions from staking further assets.
Users in the states of California, New Jersey, South Carolina, and Wisconsin were told in a blog post published by Coinbase on July 14 that they would be prevented from using certain staking services unless further notice.
The U.S. Securities and Exchange Commission (SEC) sued the exchange in June, accusing it of providing securities without first registering them with the agency.
As a result, 10 different states’ regulatory organisations filed independent legal action, forcing Coinbase to temporarily halt some of its services.
Even before it had a chance to defend itself, the exchange made clear that it intended to comply in full with the preliminary governmental instructions.
In light of recent regulatory moves in California, New Jersey, South Carolina, and Wisconsin, Coinbase has temporarily suspended the staking of further assets.
In spite of the regulatory processes, users in the states of Alabama, Illinois, Kentucky, Maryland, Vermont, and Washington may still stake cryptocurrencies as they did before.
The SEC’s lawsuit against Coinbase had just concluded its first pre-motion hearing prior to this news. On June 6th, the commission sued the exchange, claiming it had been acting as an unlicensed securities broker since 2019. Coinbase has always said the rumours are false.
Various cryptocurrency organisations have been under scrutiny from state and federal authorities in recent months for their staking services, with the claims that these services violate securities laws.
Kraken, another major exchange, settled with the SEC in February for $30 million, forcing it to end its staking services and programmes for customers in the United States.
The increased attention and regulatory complexity of the crypto business are reflected in Coinbase’s decision to temporarily suspend staking services in certain locations.
Exchanges are managing the hurdles of compliance standards while working to defend their business practises in the face of ongoing regulatory proceedings and litigation.
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