By George Ward
Stacy Warden, the CEO of the Algorand Foundation, has confirmed speculations on Twitter regarding Coinbase’s move to terminate staking rewards for retail customers of Algorand. However, Coinbase and Algorand have provided different explanations for this decision.
Warden Gives Possible Reason For Coinbase’s Decision
Warden’s tweet indicated that Coinbase notified Algorand of its decision to end incentives for ALGO tokens on March 22nd. This occurred as the crypto firm reviewed its range of products and services in light of a Wells Notice received from the US SEC on the same day.
However, the CEO noted that the recent development would not affect the trading of ALGO tokens and the governance rewards received by institutional investors. In a plot twist, Coinbase has denied Warden’s explanation.
Coinbase has refuted these allegations, with a spokesperson for the crypto exchange saying that the Algorand news is not linked to recent regulatory developments. The spokesperson further stated that the decision to discontinue ALGO rewards is unrelated to regulatory developments.
Since the beginning of this year, US regulators have set their sights on crypto firms, especially crypto exchanges, with Coinbase the most recent crypto company under scrutiny. Paul Grewal, Coinbase’s chief legal officer, recently revealed that the company got a Wells Notice from the SEC.
Grewal stated that the warning was issued after Coinbase had presented multiple registration proposals to the SEC over several months, none of which received a response from the commission. In addition, the legal officer mentioned that Coinbase has persistently requested the SEC to initiate rulemaking for the crypto industry.
Trouble Brewing Between The SEC And Coinbase
The chief legal officer noted that the firm sought clarification from the SEC regarding its stance on staking services and the inadequate notice given to the industry. However, the regulator did not respond.
Grewal opined that the company got a Wells Notice from the securities regulator two days later. The Wells Notice included the company’s staking services, which the legal officer claims Coinbase referenced 57 times in its S-1 document in 2021.
He said the regulator reviewed the S-1 document then but did not comment. About two months ago, the SEC settled its case with Kraken, a cryptocurrency exchange accused of offering and operating an unlicensed crypto asset staking-as-a-service program.
The securities regulator then argued that such an act breached its securities regulator. Hence, Kraken agreed to halt its staking program in the US and pay $30 million in disgorgement, civil penalties, and prejudgment interest as a component of the agreement.
Less than two months after Kraken’s issue with the SEC, Coinbase exchange received a Wells Notice. A Wells Notice is a letter notifying a company of potential securities law violations and warning of possible enforcement action by the SEC. Despite this, the exchange has stated that it will maintain its normal product and service operations.