Coinbase Reiterates Staking Services Continue Despite SEC Crackdown

• Coinbase has reiterated to customers that its staking services will continue, and may actually increase, despite SEC’s crackdown.
• The exchange stated that users earn rewards from decentralized protocols rather than the exchange itself.
• The move is seen as an attempt to avoid any potential grey area issues faced by competing exchanges like Kraken.

Coinbase Continues Staking Services

Coinbase has reassured customers that its staking services will remain operational and may even increase, despite the United States Securities and Exchange Commission (U.S. SEC) continuing to crack down on such services offered by centralized providers.

Rewards from Decentralized Protocols

The exchange updated its staking terms and conditions effective 29 March in a new customer email, which explicitly stated that users earn rewards from decentralized protocols rather than from the exchange itself. Popular trader AltcoinPsycho shared this detail on Twitter yesterday. Coinbase acts only as a service provider connecting users, validators, and the protocol; it does not offer a portion of its own staking rewards.

SEC Crackdown on Crypto Staking Services

The SEC recently cracked down on crypto staking services with a $30 million settlement with competing exchange Kraken for allegedly failing to register its staking-as-a-service program with the regulator. As part of the agreement, Kraken can no longer provide such services in the United States due to investors being offered outsized returns untethered to any economic realities while Kraken also being unable to pay any returns at all according to their complaint against them.

Coinbase CEO Defends Position

Coinbase CEO Brian Armstrong has claimed that their staking services are fundamentally different from those provided by competitors like Kraken and stated his willingness to defend this position in court if necessary.

Potential Increase in Rewards

The customer email sent out by Coinbase mentioned that “Your staked assets will continue earning rewards” and “Your staking rewards may actually increase” which could be seen as irritating for authorities but highlighting how clear distinction between protocol rewards and being a service provider could help them avoid potential issues with regulatory bodies in future


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