Cryptocurrency staking is an impactful technological development and should not by itself implicate securities laws. SEC are entering the cryptocurrency staking conversation these days.
Coinbase CEO Brian Armstrong expressed: “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.
Staking is an 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.
Staking is not a security. Here’s a good primer: 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.
Regulation by enforcement doesn’t work. It encourages companies to operate offshore, which is what happened with FTX. 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.”
In the past month Gary Gensler stated, “We SECGov charged Genesis & Gemini for the unregistered offer and sale of crypto asset securities through Gemini Earn. Crypto intermediaries need to comply with our securities laws. This protects investors. It promotes trust in markets. It’s not optional. It’s the law.”
Regular everyday investors are already fed up of the protect investors theory from the SEC. And many of them now wondering, “What the hell is crypto asset securities.” There is a lot of clarity required for when a token will be known as a security.
Howey Test: “The test of whether there is an ‘investment contract’ under the Securities Act is whether the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others…”
The Howey Test is met if there’s an: – Investment of money – In a common enterprise – With an expectation of profits – Solely from the efforts of others!
It looks like the US is using rules created before computers to regulate the Fourth Industrial Revolution. They’re often antiquated and use old economy paradigms to categorize tech with no precedent. SEC is trying to advance control over DeFi by ignoring one crucial world.
A finance graduate, Maheen Hernandez has been drawn to cryptocurrencies ever since Bitcoin first emerged in 2009. Nearly a decade later, Maheen is actively working to spread awareness about cryptocurrencies as well as their impact on the traditional currencies. Appreciate the work? Send a tip to: 0x75395Ea9a42d2742E8d0C798068DeF3590C5Faa5
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