- Coinbase, under legal scrutiny from regulators, will persist in running its staking service, a crucial part of its diversification strategy.
- CEO Brian Armstrong differentiates Coinbase’s current legal situation from Binance’s, emphasizing on their operational and regulatory dissimilarities.
Brian Armstrong, CEO of the popular cryptocurrency exchange Coinbase, voiced firm intentions to continue operating their crypto staking service amidst ongoing lawsuits from state and federal regulators. During his recent appearance at the Bloomberg Invest Conference, Armstrong reassured attendees that, despite the ongoing court cases, it was still “business as usual.”
Significantly, the staking service contributes to around 3% of Coinbase’s net revenue, hence the determination to keep it running. These comments followed the SEC’s recent action against Coinbase, accusing the firm of selling unregistered securities among other violations. A coalition of ten states led by the Alabama Securities Commission concurrently alleged that Coinbase’s staking program violated state securities laws.
Coinbase’s staking service is a critical aspect of the company’s endeavor to move away from a revenue base predominantly dependent on trading fees. In 2022, nearly 90% of the company’s revenue stemmed from transaction fees. However, as the prolonged bearish crypto market turns investors away from trading, the firm’s earnings have suffered.
Armstrong sought to assure users and investors that the company is not vulnerable to a banking crisis-like rush of withdrawals.
“All the funds are backed one-to-one, and you don’t have to take our word for it,”
he said, citing the validation of the company’s auditors as a public company.
During a CNBC interview, Armstrong drew attention to the stark contrast between the SEC’s lawsuits against Coinbase and Binance. Without explicitly criticizing Binance, he noted the differences in timing and nature of the regulatory actions taken against both companies.
In particular, Armstrong highlighted that, unlike Coinbase, Binance and its CEO Changpeng Zhao were accused of fraudulent activities. He further emphasized that the SEC’s complaint against Coinbase did not include him personally, drawing a clear distinction between the legal and regulatory battles faced by the two exchanges.
While refraining from commenting directly on Binance’s case, Armstrong pointed out that the two situations should not be lumped together due to their coincidental timing. He also underlined Coinbase’s commitment to transparency and compliance, citing the firm’s history of active engagement with global regulators.