Are Staking Services in Regulators Crosshairs?

Are Staking Services in Regulators Crosshairs?

The recent SEC lawsuit against Coinbase has created ripples of concern throughout the cryptocurrency industry. Exchanges have become the primary target of regulatory actions. Most likely due to the potential for a financial win fall for the SEC. As the dust settles, questions arise about who might be the next target and the extent of regulatory involvement in this ongoing battle. Will we see more exchanges attacked like KuCoin? or are they going to continue down the chain to other crypto services. Staking services, in particular, appear to be vulnerable to regulatory exploitation. In this article, we delve into the potential impact on staking services, analyzing the SEC's concerns and the implications for the industry.

Are Staking Services Under Scrutiny? The SEC's recent actions suggest that staking services could be a focal point for regulatory bodies. Phrases like "financial return" and "% returns" act as magnets for the SEC's attention. By examining the SEC's press release (available here), we find that the agency identifies concerns with activities like "pooling funds to perform blockchain transactions," "staking the pool to perform blockchain validation," and "providing a portion of the rewards." Interestingly, these are the exact functions of staking. This raises the question of whether other services that pool funds, perform tasks, and distribute rewards could potentially become future targets for the SEC.

Considerations for Staking Pools: The SEC lawsuit against Coinbase brings to mind other staking pools utilized in the past, such as G-pool, which stakes Theta tokens and offers a percentage of the rewards while charging fees. The unfolding of these scenarios piques curiosity. Regulators and governing bodies, driven by the fear of losing control, have ignited the war on crypto. This reality becomes increasingly evident with each passing day. A tighter grip on the industry may inadvertently force more people underground.

The SEC's lawsuit against Coinbase should have staking services banding together behind Coinbase in this lawsuit. For years Coinbase has tried to work with the SEC cooperatively to get answers.. (see Coinbase press release) The SEC has decided they would prefer to take the approach of getting answers through strong arm enforcement. Why?? $$$! They don’t get a pay day by working cooperatively, but multi million dollar lawsuits on the other hand… that’s their bread and butter. My concern with tighter rules, and legislation is not like many others (where it will stifle inovation). Although that may happen but..

It makes things harder for law abiding citizens that want to play in the industry. Thus it makes it more appealing to go underground and not report or be anonymous. (enter Decentral Exchanges)

It also could forces us to use less credible, higher risk methods for continuing to play the game.

Till next time my friends, Later
-Dest