SEC Agrees to Dismiss Proceedings Against Coinbase
The US Securities and Exchange Commission and Coinbase agree to end the dispute over staking offerings. Previously, the SEC had accused Coinbase that the staking services violated securities laws.
The documentation for the settlement was filed before a federal court on Monday (October 23, 2023), immediately after which Coinbase made a public announcement. According to the records, Coinbase has effectively ended its main staking program.
Now, all that remains is to finalize the dismissal, which could settle one of the most discussed cases between the crypto industry and the SEC in the year 2023.
Background Information on the Case
The SEC sued Coinbase in March 2023 due to alleged violations related to the sale of unregistered securities. The concrete point of contention was the staking offerings, which allow users to earn rewards through their crypto holdings by contributing to the validation and security of blockchain networks.
The SEC had classified at least some of these staking services as a form of security that requires registration with the authority. Coinbase had refused to comply with such registrations, claiming that staking offerings, as operated by them, do not fall under the securities laws.
What Led to the Settlement
Coinbase hinted that modifying the staking service paved the way for the SEC to move toward dismissal. It remains unclear what exact changes Coinbase made to its staking offering.
The company’s original business model for this service included the pooling of user funds and delegation of staking rights, while receiving a commission for handling these processes.
Coinbase announced it was keen to communicate with the SEC but had previously commented on being ready to fight for its interpretation and expansion of staking in court. Clarifications are still awaited whether Coinbase might relaunch its staking services with other changes.
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