Follow Slashdot stories on Twitter

 


Forgot your password?
Close
typodupeerror
×
Businesses United States

Coinbase CEO Armstrong Decries Rumors of Possible US SEC Ban on Crypto Staking (bloomberg.com) 44

Posted by msmash from the shape-of-things-to-come dept.
Coinbase's head Brian Armstrong escalated his war of words with the US Securities and Exchange Commission, warning he'd heard rumors the agency wants to "get rid of" crypto staking by retail investors. Bloomberg: "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," he tweeted on Wednesday, while arguing that the practice of staking is "a really important innovation." The SEC declined to comment on Armstrong's tweets. The agency has repeatedly said that most digital tokens are securities that should be subject to its rules. Chair Gary Gensler has previously indicated staking could fall under the regulator's purview. Armstrong argued that staking is not a security.

Staking involves earning rewards by locking up coins to help order transactions on various blockchains such as Ethereum. Coinbase, Kraken and other crypto exchanges have waded into staking products to diversify revenues. The firms let users stake coins, without needing specialist computer equipment nor having a minimum amount of 32 Ether, and take a cut of the rewards. Staking on Ethereum can earn yields of about 6%. Coinbase has flagged the progress of its staking services to shareholders.
This discussion has been archived. No new comments can be posted.

Coinbase CEO Armstrong Decries Rumors of Possible US SEC Ban on Crypto Staking More

Coinbase CEO Armstrong Decries Rumors of Possible US SEC Ban on Crypto Staking

Comments Filter:

  • Where does the money come from? (Score:3, Interesting)

    by leathered ( 780018 ) on Thursday February 09, 2023 @10:31AM (#63278635)

    One thing that Armstrong and his other cronies in the crypto 'industry' won't tell you is where the staking rewards come from. My guess it relies on new investors and their money to pay off earlier investors. I think there is a name for that, Fonzie dream or something?

    • One thing that Armstrong and his other cronies in the crypto 'industry' won't tell you is where the staking rewards come from.

      *Facepalm*. This is yet another example of why this site is utter trash when it comes to crypto. How staking works is WIDELY KNOWN.

      Those rewards come from validator nodes on Proof of Stake protocols handing back a percentage of their fees back to people who have staked coins with them.

      The more coins staked with a particular validator, the more weight it has on validating network oper

      • The article claims a 6% yield, the base fee of transactions must be absurdly high. Prohibitively so for day to day transactions. How can they sustain business? Oh right, they mined it out of thin air...

        • The amount of money processed in day-to-day transactions has to be much higher than the the amount of money that is staked. If everyone stakes and no one transacts then the yield is zero.

        • the base fee of transactions must be absurdly high.

          Yes. This is also something WIDELY KNOWN. We've even covered the absurdly high gas fees here on Slashdot.

      • I guess impressive jargon more than makes up for an actual business plan.
    • Ignorance abound in slashdot. Rewards from staking generally are a combination of transaction fees and inflation. Many protocols have a set number of coins that will ever be minted and an emission curve defining the amount of inflation over what time period. Many layer ones initially find themselves with the base asset (eth,ada, etc) and will transition to be funded by transaction fees from side gains they provide security for.

    • One thing that Armstrong and his other cronies in the crypto 'industry' won't tell you is where the staking rewards come from.

      Staking is an alternative scheme to mining. The new coins literally appear out of thin air, which means when you stake you're essentially being paid in inflation. Now if you're dealing with a cryptocurrency that is "mined out" (meaning the algorithm has hit its predetermined coin limit and no new coins are being produced), you'd be staking for a percentage of transaction fees.

      In either case, you're not earning real money, you're earning cryptocurrency. It's entirely up to the free hand of the market whet

  • The law says it must be banned due to chargebacks. (Score:4, Insightful)

    by pimpsoftcom ( 877143 ) on Thursday February 09, 2023 @10:35AM (#63278651) Journal

    As much as people who support cryptocurrency don't want to hear this, the fact that Crypto currency cannot force a chargeback is the core issue that is making these regulators not trust.

    A system that a customer cannot get help with when they have been scammed is not a secure system, and is not a system that can be considered trustworthy.

    Electronic cryptocurrencies are not built to be secure or compliant with current finance law due to this gap.

    As a result, it will be banned, and it will be regulated out of existence, because it has been designed from the ground up to not respect the current financial laws that mandate that chargebacks must be a part of the system, so it is illegal by default.

    • The current finance system doesn't require this... (Score:4, Interesting)

      by DeplorableCodeMonkey ( 4828467 ) on Thursday February 09, 2023 @11:13AM (#63278779)

      If you send $5k via MoneyGram or Western Union to a scammer, there is absolutely no requirement under law that those vendors get your money back.

      If you send $5k to someone by check or wire transfer and decide they're a scammer, you have no legal right to just pull a PayPal style "freeze and clawback their funds" without some intervention by law enforcement or a judge.

      The financial system is a multi-layered system with a whole lot of inconsistent regulation. What is true of credit cards is not true of many forms of banking or money transfers.

      So no, it will not be banned for this because it is not a credit card-adjacent system. It bears more in common with MoneyGram than Mastercard.

      • Straight from the MoneyGram web site:
        What can I do if the person to whom I sent a money transfer and I are the victims of fraud?
        You may use the contact form on this site to report fraudulent activity by selecting Report Fraud from the Type of Request drop down*. Please provide details of the incident in the Comments field.

        *If you suspect fraud on a transaction that has not yet been received, please contact our Customer Care Center at 1-800-926-9400 in order to have the transaction cancelled immediately

        https [moneygram.com]

        • Straight from the MoneyGram web site:

          What's your point? I skimmed over that whole section. Did not see one line saying they were going to make you whole rather than work with law enforcement to get the person who defrauded you.

          In crypto, if I send to a non-existent address and the transaction processes then I'm screwed, no going back. IRL no one actually receives the funds and the funds can be recovered.

          IRL someone with your account and routing numbers can just start drafting money from your accounts, and t

        • You think sending a letter is the same thing as a chargeback? Do you not understand what is being talked about here?

          • There are lots of reasons that one might want to rollback a transaction. I gave one example of how crypto fails in that regard.

    • afaik, Cardano's answer to this is create a side-chain on top of ADA that has whatever type of charge-back (or other provisions) you want - via smart contracts.

    • This isn't about using Crypto as currency (Score:4, Informative)

      by rsilvergun ( 571051 ) on Thursday February 09, 2023 @01:09PM (#63279245)
      nobody does that except a handful of money launderers. Mostly state actors. This is about "staking", e.g. that thing Ethereum used to replace mining. Staking means you put up a "stake" of coins in exchange for more coins. It's a security 100%.

      SEC isn't looking to ban it, per the article, they're going to stop retail investors from buying in because it's an ultra high risk investment and retail investors are generally not able to absorb those losses.

      Of course these are scams, and so they rely almost entirely on retail investors to make their money. They're generally structured so that big institutional investors can get out, usually by requiring stakes to be withdrawn as USD/Cash in increments of $100k and everything else to be sold on an exchange if you want your money out. These scams draw big investors who understand that it's the little guys who get caught holding the bag during the inevitable collapse. Take those little guys out and the only bag holders are the big guys, and they know that and won't buy in.

      Basically, SEC is talking about limiting access to high risk securities to people who can afford to take the risk, which is normal and done every day. It's not a ban, but applying this basic regulation to crypto would kill it dead and Coinbase knows it.

    • the fact that Crypto currency cannot force a chargeback is the core issue that is making these regulators not trust.

      Errr no. Chargebacks are not a thing either mandated nor possible with the overwhelming majority of our financial transaction systems. Most ways of transferring money do not provide any chargeback mechanism, nor is there any requirement for it.

      In fact Credit Cards are almost complete outliers in this regards.

  • and incentivize locking it up and not using it, very innovative
  • Under the Howey Test, a transaction is an investment contract if: 1. It is an investment of money 2. There is an expectation of profits from the investment 3. The investment of money is in a common enterprise 4. Any profit comes from the efforts of a promoter or third party tell me one thing that it passes?

Slashdot Top Deals

Think of it! With VLSI we can pack 100 ENIACs in 1 sq. cm.!

Close