SEC Starts Scrutinizing Crypto Exchange Coinbase for Its Crypto Staking Program

The U.S. Securities and Exchange Commission (SEC) has extended its oversight over the Coinbase staking program. This program allows Coinbase users to stake their digital assets and earn rewards in return.

As per Coinbase’s quarterly regulatory filing, it noted that the exchange “received investigative subpoenas and requests from the SEC for documents and information about certain customer programs, operations and existing and intended future products”.

In addition to its staking program, the SEC has asked Coinbase to release information on stablecoin products, the asset-listing process, and the classification of assets. Coinbase is not the first crypto exchange to offer staking services. It allows users to generate yields on their crypto holdings by allowing them to verify transactions and secure the blockchain network.

Coinbase Q2 Results and Battle With SEC

On Tuesday, August 9, Coinbase announced its results for the second quarter of 2022 reporting a net loss of more than $1 billion. The crypto exchange attributed its dismal performance to the market crash and the uncertain macroeconomic conditions.

For the second quarter, Coinbase’s blockchain-rewards revenue from staking accounted for 8.5% of the net revenue. On the other hand, Coinbase has entered into a fresh scuffle with the SEC after the securities regulator alleged that some of the crypto listings on Coinbase are securities. However, Coinbase has strongly denied these allegations. In its latest regulatory filing, Coinbase noted:

“As with all regulators around the world, we are committed to productive discussion with the SEC about crypto assets and securities regulation”.

After the crypto market crash this year, the SEC is looking to tighten its grip over the crypto space. As a result, it has increased its vigilance over the working of crypto exchange and crypto firms.

After a strong listing last year, the COIN stock has been heading south pretty fast. The COIN stock is already trading more than 60% down year-to-date.