Coinbase, the largest cryptocurrency exchange in the United States, recently halted payouts of ETH staking rewards due to a “minor technical issue.” The company assured users that their rewards are still being earned and will be paid out, but it may take up to three days to fully resolve the issue.
The staking service offered by Coinbase enables users to deposit ETH and other proof-of-stake cryptocurrencies, which can then be utilized to secure the corresponding blockchains and earn rewards. Unlike direct staking, which requires a minimum deposit of 32 ETH ($58,300), Coinbase’s service creates a more accessible path for most people to begin staking ETH.
However, staking services in the United States have faced scrutiny from the Securities and Exchange Commission (SEC) this year, as they have been accused of violating securities laws. In February, the SEC fined Kraken $30 million for not registering its staking service and forced it to shut down before ETH staking withdrawals were even enabled.
Coinbase has not yet been officially charged, but it received a Wells Notice from the SEC in March warning of possible securities violations. The exchange company argued that staking does not qualify as a securities offering and has expressed readiness to take the issue to court if necessary. The firm even requested a court order directing the SEC to clarify rules surrounding crypto assets, a motion the regulatory agency sought to have dismissed on Tuesday.
Importantly, Coinbase confirmed that the suspension of ETH staking rewards is unrelated to any legal or regulatory issues. However, the company did not provide further details about the technical issue or its cause, nor did it explain why it would take 48-72 hours to fix. As stated by Coinbase, “We’ll share an update as soon as this issue is resolved.”
While staking services such as Coinbase provide users with a simplified method to get started in staking ETH, the unresolved regulatory concerns and the recent temporary suspension of rewards payouts touch upon two critical aspects of the crypto industry: regulation and reliability. As the cryptocurrency sector continues to evolve, it is essential for crypto enthusiasts and followers to be aware of such developments and assess the potential risks and rewards associated with these services. In conclusion, although the technical issue is temporary and unrelated to regulatory concerns, users must remain vigilant about any complications that may potentially arise from utilizing platforms like Coinbase.
Source: Decrypt
