The Kraken & the US settlement over unregistered securities cases reached another level of crypto advocacy among the Crypto companies. After facing criticism, Coinbase pledged to remain a leader to save crypto in future legal fights.
As we know, the United States Securities and Exchange Commission (SEC) fined Kraken crypto exchange $30 million over crypto staking services. Kraken exchange also admitted its mistake blindly & settled the case and closed its crypto-staking services for US customers. The Kraken exchange was fully aware of the legal right to fight against the SEC agency but still, the company decided to settle the case instead of fighting in court.
Kraken co-founder Jesse Powell said that Kraken is not in a better financial position to fight against SEC but at the same time, he said that some other crypto companies will fight in favour of crypto staking services in the court.
On 12 Feb 2023, the Coinbase exchange shared its opinion via a dedicated blog post and confirmed that if Coinbase will face a similar kind of enforcement action from the US authorities then surely it will be happy to fight in the court instead settle down.
Paul Grewal, the chief legal officer at Coinbase, also shared his opinion on this matter through the blog post and said that Crypto staking services are not securities offerings under neither of the US Securities Act & nor under Howey test.
“Trying to superimpose securities law onto a process like staking doesn’t help consumers at all and instead imposes unnecessarily aggressive mandates that will prevent US consumers from accessing basic crypto services and push users to offshore, unregulated platforms.”
Further, Grewal noted that none of the four elements of the Howey test applicable on crypto staking services and also he noted that the Howey test was introduced in a 1946 supreme court case but here cryptocurrencies are modern technology-based assets so here it doesn’t make sense to apply the old rules on modern assets.