Coinbase would shut down ETH staking under regulatory threat, says CEO

Zoltan Vardai

2 years ago

Responding to a hypothetical scenario on Twitter, Coinbase CEO Brian Armstrong said that the company would shut down its Ethereum staking services to preserve the blockchain network’s integrity, in the event of a regulatory crackdown.

Fast facts

The hypothetical question was posted on Sunday by Lefteris Karapetsas, founder of Rotki, an open-source crypto analytics, and accounting app, tagging major companies like Coinbase, Kraken, Lido Finance, Staked, and Bitcoin Suisse.
Karapetsas asked the companies how they would respond if regulators would ask them to censor at the Ethereum protocol level with their validators, offering two possibilities: “A) Comply and censor at protocol level” or “B) Shut down the staking service and preserve network integrity.”
Armstrong responded on Thursday, writing: “It’s a hypothetical we hopefully won’t actually face. But if we did we’d go with B I think. Got to focus on the bigger picture.”
The Coinbase CEO further added that a third and better option may also present itself: “There may be some better option (C) or a legal challenge as well that could help reach a better outcome.”

Coinbase Prime started offering ETH staking to US-based institutional clients at the beginning of August. In its latest shareholder letter, Coinbase wrote: “In early August, we began offering Ethereum staking for institutional clients for the first time. We’ll continue to add more assets for staking for both our retail and institutional clients going forward.”