Coinbase, the largest cryptocurrency exchange in the United States, remains undeterred by the recent lawsuit filed against it by the Securities and Exchange Commission (SEC). The company’s CEO, Brian Armstrong, assured investors and users that the legal action would not impact its operations, including its staking services, which were among the products targeted by the SEC.
Armstrong’s comments came just a day after the SEC sued Coinbase for operating as an unregistered securities exchange, broker, and clearing agency. Speaking at the Bloomberg Invest Conference, Armstrong emphasized that Coinbase would continue to offer staking services to its clients. He revealed that the staking program contributed 3% to the company’s overall net revenue, making it a significant aspect of its business model.
“Even though this complaint came in from the SEC, it’s really business as usual today. We’re continuing to trade our assets on our platform. We’re not going to wind down our staking service.”
Brian Armstrong, CEO of Coinbase
Armstrong further emphasized that Coinbase’s staking product was designed to be compliant with regulations.
In a recent interview with The Block, Coinbase’s Chief Legal Officer, Paul Grewal, echoed Armstrong’s sentiments. Grewal confirmed that the exchange had no intentions of delisting any of the cryptocurrencies implicated as securities in the SEC’s lawsuit. Also, he acknowledged that the company reviewed new facts and information to reassess its previous analysis of the tokens in question. “We remain confident in our original analysis,” Grewal added.
Coinbase’s commitment to business as usual
Despite the regulatory scrutiny, Coinbase is steadfast in its determination to maintain its operations without interruption. The SEC’s lawsuit accuses the exchange of various violations, including selling unregistered securities. Additionally, a coalition of ten states, led by the Alabama Securities Commission, has also levied allegations against Coinbase regarding its staking program, claiming violations of state securities laws.
Coinbase’s staking service is a crucial element of the company’s strategy to diversify its revenue base, which has traditionally relied heavily on transaction fees. Even as the prolonged crypto bear market has dampened trading activity, staking has provided a reliable source of income. In 2022, transaction fees accounted for approximately 90% of Coinbase’s revenue.
Amid concerns over the potential impact of the SEC lawsuit, Armstrong reassured stakeholders that Coinbase would not face a rush of withdrawals akin to a bank run. He emphasized that all funds on the platform were backed one-to-one and independently verified by auditors, underscoring the company’s commitment to transparency and accountability as a publicly traded entity.
