Benzinga - Brian Armstrong, the co-founder, and CEO of Coinbase Global Inc (NASDAQ: COIN), the largest cryptocurrency exchange in the U.S., has spoken out about the regulatory crackdown on the crypto industry, reiterating that the exchange's staking product should not be classified as a security.
In a Bloomberg Television interview, he explained that Coinbase's staking product is not a security because customers never turn their assets over to the exchange.
Instead, Coinbase simply provides a service that allows customers to participate in staking, which is a decentralized protocol that generates yields by allowing users to facilitate transactions on a blockchain, he said.
This stance puts Armstrong at odds with Securities and Exchange Commission Chairman Gary Gensler, who has expressed concerns about the regulatory status of staking.
Coinbase has received investigative subpoenas from the SEC about staking, stablecoin, and yield-generating products, but the company has said it may not remove a particular crypto asset even if the SEC alleges that it is a security, pending a final judicial determination.
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Armstrong is prepared to defend Coinbase's staking product in court if necessary, but he emphasized that the company is not looking for a fight and wants to work collaboratively with regulators around the world.
Coinbase's rival exchange, Kraken, recently entered into a settlement with the SEC to close its U.S. staking business, where customers earned yields on tokens.
Paxos Trust Co. also stopped issuing a Binance-branded USD (CRYPTO: BUSD) stablecoin under pressure from New York regulators.
The SEC has also floated a proposal to toughen the regulation of cryptocurrency custody.
Despite these challenges, Armstrong said he is not concerned about the broader stablecoin sector in digital assets and is bullish on USD Coin (CRYPTO: USDC), a dollar-pegged stablecoin issued by Circle.
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Photo: Coinbase
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