On March 22, Algorand Foundation CEO Stacy Waden took to Twitter to confirm reports that Coinbase had discontinued staking rewards for retail customers of ALGO tokens, the native cryptocurrency of the Algorand blockchain. While Coinbase and Algorand have different explanations for the move, Waden’s tweet stated that Coinbase informed Algorand about the termination of rewards on the same day that the SEC issued a Wells Notice to the crypto exchange as it evaluates its portfolio of products and services.
Hi #algofam, woke up this a.m, like many of you, to find that @coinbase killed rewards. They've now informed us that they are evaluating their services in light of recent regulatory scrutiny, and, for that reason, they will no longer support Algo rewards for Retail customers. 1/
Coinbase has denied the claims that their recent decision to halt Algorand (ALGO) rewards is related to regulatory developments. A spokesperson for the crypto exchange said: “The Algorand news is not related. Coinbase works alongside asset issuers to provide rewards and continuously reevaluates our offerings to ensure the best customer experience. As a result, we have decided to discontinue Algorand (ALGO) rewards at this time.” Waden clarified in the thread that the change will not affect ALGO token trading and governance rewards for institutional investors.
On March 22, 2023, Coinbase, one of the leading crypto companies in the U.S., was issued a Wells Notice by U.S. regulators – a warning typically sent to those facing potential enforcement action. Paul Grewal, Coinbase’s Chief Legal Officer, stated that this notice came after numerous proposals were made to the SEC seeking clarity on registration and industry-wide regulation over the past several months, none of which have been responded to.
Grewal further highlighted Coinbase’s petition for rulemaking in July 2022, their subsequent comment letter submitted on March 20 in support of the same, and their requests for clarification surrounding staking services. He elaborated that only two days after submitting these documents to the SEC, Coinbase was sent a Wells notice citing their staking services – a service mentioned 57 times in their S-1, which the SEC reviewed when they became a public company.
The U.S. Securities and Exchange Commission (SEC) recently reached an agreement with crypto exchange Kraken, ordering the company to pay $30 million in disgorgement, prejudgment interest, and civil penalties for allegedly failing to register its crypto asset staking-as-a-service program as securities under its purview. This came just two months before the SEC sent a Wells Notice to Coinbase. Despite the warning, Coinbase has stated that its products and services will remain operational.
