Brian Armstrong says Coinbase has heard “rumors” the SEC wants to “get rid of” crypto staking for retail investors, which “would be a terrible path for the US”

Coinbase Global Inc.'s head Brian Armstrong escalated his war of words with the Securities …

Bloomberg 2023-02-09

Context & Ripple Effects

The staking warning is an early marker of Coinbase’s widening conflict with the SEC. In subsequent coverage, Armstrong described the agency as pursuing a “lone crusade” and said regulatory uncertainty had put relocation from the US on the table.

The disagreement later appeared to reach beyond staking: Armstrong said the SEC had asked Coinbase to halt trading in every crypto asset except bitcoin before suing the exchange. That makes the retail-staking claim relevant as part of a broader dispute over which crypto services can operate in the US.

First-order effects

Coinbase publicly puts its retail staking business and its customers on notice that the company believes the SEC may seek to eliminate that service, though the report describes the claim as a rumor rather than a formal SEC action.
Armstrong turns a potential product-level restriction into a public policy dispute, positioning Coinbase against the SEC over the US treatment of crypto services.

Second-order effects

The reported staking pressure strengthens Coinbase’s case for regulatory clarity; later, Armstrong tied the absence of clarity to the possibility of moving operations outside the US.
Other US crypto platforms offering retail staking face the same perceived compliance exposure, while Coinbase’s public confrontation makes the SEC’s stance a competitive and customer-retention issue rather than only a legal one.

Third-order effects

If the pattern of pressure described by Armstrong extends from staking to trading, US crypto platforms will increasingly be organized around regulatory boundaries set through enforcement disputes rather than clear product rules.
The dispute points to a widening platform-versus-regulator conflict in which the viability of US-based crypto services is tied to whether the SEC’s interpretation prevails.

The trend: US crypto platforms are treating SEC pressure on individual services as part of a broader contest over whether regulated crypto businesses can remain viable in the country.

Discussion

@brian_armstrong Brian Armstrong on x
1/ We're hearing rumors that the SEC would like to get rid of crypto staking in the U.S. for retail customers. I hope that's not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen.
@brian_armstrong Brian Armstrong on x
2/ Staking is a really important innovation in crypto. It allows users to participate directly in running open crypto networks. Staking brings many positive improvements to the space, including scalability, increased security, and reduced carbon footprints.
@ap_abacus Andrew on x
UPDATE: @coinbase has been told to wind down crypto staking or face fines and other more debilitating actions. **this is a coordinated multi-agency action/process.
@iohk_charles Charles Hoskinson on x
@DiarioBitcoin @brian_armstrong Ethereum staking is problematic. Temporarily giving up your assets to someone else to have them get a return looks a lot like regulated products. Slashing and bonds not so good. Non-custodial liquid staking on the other hand is like the mining pool…
@iohk_charles Charles Hoskinson on x
@DiarioBitcoin @brian_armstrong We thought a lot about what makes sense for a sustainable, proof of stake protocol that promotes control by the many instead of the few and creates a large decentralized environment. Locking funds, encouraging centralization, and poor protocol desi…
@brian_armstrong Brian Armstrong on x
6/ Hopefully we can work together to publish clear rules for the industry, and come up with sensible solutions that protect consumers while preserving innovation and national security interests in the U.S.
@tier10k @tier10k on x
[DB] Coinbase's Armstrong: Hearing Rumors That the SEC Would Like to Get Rid of Crypto Staking in the US for Retail Customers
@smtuffy Sean Tuffy on x
Crypto guys: we need clear guidelines SEC: Staking makes crypto a security Crypto guys: Noo, not like that
@brian_armstrong Brian Armstrong on x
5/ Regulation by enforcement doesn't work. It encourages companies to operate offshore, which is what happened with FTX.
@jchervinsky Jake Chervinsky on x
I've heard the same rumor and strongly agree with Brian that an attack on staking would be an extreme error in US policy. Thankfully, we are a country of laws. Even if the SEC would like to get rid of crypto entirely, which may be the case, the law and the courts won't allow it. …
@iamdcinvestor @iamdcinvestor on x
let's get one thing straight: Ethereum will survive and thrive, even if US regulators prohibit staking on exchanges by retail customers the network was designed to be secured by home stakers
@iohk_charles Charles Hoskinson on x
@DiarioBitcoin @brian_armstrong It's sad that all proof of stake protocols might get lumped together due to a fundamental misunderstanding about the actual facts of operation and design. It's like comparing three mile Island to a modern 4th generation nuclear reactor because they…
@thecryptolark Lark Davis on x
Coinbase CEO says he is getting word that the USA is intending to ban #crypto staking! Huge and sad is true...
@asvanevik @asvanevik on x
so let me get this right: Gary slept on the job re FTX, but now he's going after ... ETH staking?
@whalechart @whalechart on x
BREAKING: Crypto staking rumored to become illegal in the U.S.
@davidpan_1 David Pan on x
Will add that the SEC declined to comment on the speculation
@davidpan_1 David Pan on x
If SEC bans that for retail, there will be big ripple effects through the multi-billion dollar staking industry including exchanges, infra firms, protocols, derivative tokens, devs, the big VCs, and all is happening a month before withdrawal is enabled. https://www.bloomberg.com/…
@kamikaz_eth @kamikaz_eth on x
Legit question: if the US shuts down off-ramps from crypto exchanges, does that mean there's no need to pay taxes on crypto gains? If the govt is actively severing connections b/t crypto and real-world finance, what is the basis for claiming there has been a real-world profit? ht…
@newsasset @newsasset on x
Staking on Centralized exchanges and the SEC battle continues. https://twitter.com/...
@kamikaz_eth @kamikaz_eth on x
How does the Chief Legal Officer at Coinbase say the rumor that the SEC is trying to shut down cbETH is “totally false” hours after Armstrong tweets the rumor is true? This is Binance-level shitty communication and incompetence Get your shit together people jfc https://twitter.co…
@mattcorva Matt Corva on x
“Look. We failed to kill this early enough. Too many normies got a hold of these assets. Now they might use them in a productive way. Inexcusable. We must make sure only those with a second house in the hamptons can participate in technical validation and get rewarded for it.” ht…
@nlw Nathaniel Whittemore on x
Is this a surprise to anyone? Staking has been targeted for 18 months at least https://twitter.com/...
@thinkingcrypto1 Tony Edward on x
We are in the “then they fight you” phase. @GaryGensler is doing the bid of the incumbents. The banks dont like cash leaving their savings accts and going to crypto where you can stake and earn higher interest payments. https://twitter.com/...
@coinbase @coinbase on x
With the recent regulatory spotlight on staking, we're taking this opportunity to build a deeper understanding of staking and its transformative role in processing digital financial transactions 🧵
@watcherguru @watcherguru on x
JUST IN: Coinbase CEO says he heard rumors the SEC wants to ban #crypto staking.
@iampaulgrewal @iampaulgrewal on x
Totally false. https://twitter.com/...
@brian_armstrong Brian Armstrong on x
4/ We need to make sure that new technologies are encouraged to grow in the US, and not stifled by lack of clear rules. When it comes to financial services and web3, it's a matter of national security that these capabilities be built out in the U.S.
@delcrxpto Del Crxpto on x
Is $ETH's entire blockchain protocol under attack by the USA? If so, this is an attack on all of crypto. Coinbase's CEO Cites ‘Rumors’ the SEC May Ban Crypto Staking for Retail Customers https://www.coindesk.com/...
@ap_abacus Andrew on x
I've been contacted by @coinbase comms to dispute the nature and language of this tweet. **sources and noise from everywhere right now. **one agency source: “two high level OCC execs are quitting over this stuff... clear violation of the administrative procedures act.”
@brian_armstrong Brian Armstrong on x
3/ Staking is not a security. Here's a good primer: https://www.paradigm.xyz/...
@mdudas Mike Dudas on x
I've also heard that bank charters for crypto companies will be rejected. I thought America wanted to win. https://twitter.com/...
@pt Parker on x
The irony here is this would make it illegal to pay people dividends on their custodied unregistered securities, but if you wanted to collect them yourself you could run an app. So Coinbase is pro-centralization of staking & the govt is apparently encouraging decentralization. ht…
@tier10k @tier10k on x
Staking made up ~11% of Coinbase's revenue in Q3 https://twitter.com/... https://twitter.com/...
@tier10k @tier10k on x
Lido moving CeFi staking -> DeFi staking? https://twitter.com/... https://twitter.com/...
@coryklippsten @coryklippsten on x
“Reduced carbon footprint” is the benefit of Proof of Stake? This f***ing scammer. IT IS NOT A “REDUCTION” IF IT NO LONGER SOLVES THE PROBLEM. https://twitter.com/...
@kamikaz_eth @kamikaz_eth on x
US isn't a country of laws tho US is run by an incompetent and unconstitutional fourth administrative branch That's why presidential elections matter - the President appoints the heads of all these illegal agencies which are the true legislature https://twitter.com/...
@jchervinsky Jake Chervinsky on x
Take rumors for what they are: “currently circulating stories of uncertain or doubtful truth.” How many rumors of impending doom have we heard in crypto policy over the years that are just plain false? We have enough real and present dangers already without imagining new ones. ht…
@jchervinsky Jake Chervinsky on x
Yet, rumors are often worse than reality. While it's good to follow stories like this, it's important not to get carried away by every insinuation of impending doom that crosses your Twitter feed. We have plenty of live challenges in crypto policy to handle. Let's stay focused.
@dbc___ Dbc on x
Staking enables very large liquidity providers to gather up as much coins as possible and generate density of future liquidity events by luring people in with promises of yield it's not really that innovative https://twitter.com/...
@johnedeaton1 John E Deaton on x
@SBF_FTX aka SBFraud had multiple meetings w/the SEC and w/@GaryGensler. Why hasn't Gensler sat down w/the CEO of the largest exchange in the U.S., that happens to be a transparent public company, and worked on how to move forward? B/c he's doing the bidding of legacy players. ht…
@smtuffy Sean Tuffy on x
Cope harder https://twitter.com/...
@xrpcryptowolf @xrpcryptowolf on x
Coinbase CEO Brian Armstrong says he's heard rumors that the SEC would like to ban retail investors from engaging in cryptocurrency staking 🤡 https://www.coindesk.com/...
@iampaulgrewal @iampaulgrewal on x
Staking is not a security. Validators form no horizontal community or commonality. There's no vertical commonality, either. Validators don't expect rewards from significant managerial efforts of other validators—they expect rewards primarily from their own efforts and funds. http…
@robustus Dan McArdle on x
SEC is a disaster - Prevented ~0 crypto scams - Got friendly with SBF & FTX - Preemptively goes after good actors, chills everyone except fraudsters - Goes after bad actors only after damage is done - Wants to ban the stuff that makes retail money in risk-minimized way https://tw…
@lbrycom @lbrycom on x
It's increasingly obvious that there is a coordinated effort among government agencies to destroy cryptocurrency in the US. The question is whether those with the resources will wake up and fight before it's all over. https://twitter.com/...
@johnedeaton1 John E Deaton on x
I said it is an all out war by the SEC and Gensler isn't letting up because Congress is inept and broken. https://twitter.com/...

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