BTCS Addresses Recent SEC Action Against Coinbase and Clarifies its Non-Custodial Staking Operations
06 Junio 2023 - 10:30AM
BTCS Inc. (Nasdaq: BTCS) (“BTCS” or the “Company”), a blockchain
technology-focused company, today addresses the recent Securities
and Exchange Commission (“SEC”) action against Coinbase regarding
its staking operations and clarifies the differences between BTCS's
non-custodial staking model and the practices that the SEC has
taken issue with.
Today, the SEC took action against Coinbase for
its staking operations among other things. Similar to Coinbase,
BTCS conducted a thorough analysis over two years ago, concluding
in our view, that “Core Staking” as defined by Coinbase, does not
create a security. BTCS performs “Core Staking” under the
terminology of “non-custodial staking” or “staking-as-a-service”.
While Coinbase’s analysis under the Howey test is valuable (link:
here) and we commend their efforts, it is important to note that in
a February 10, 2023 blog post, they state “At Coinbase, our core
staking service is offered through our Coinbase Earn program, which
allows users to stake certain assets for a recurring payment from
the blockchain protocol.” However, in the Coinbase Earn program,
Coinbase takes your private keys, i.e. they hold your crypto, which
is a material difference and not in line with their own analysis
and assertion under the Howey test regarding an investment of
money. By presenting an argument that doesn’t apply to the SEC’s
concerns, Coinbase is muddying the waters and doing a disservice to
companies like BTCS, the crypto industry, the general public, and
regulators.
BTCS’s CEO, Charles Allen, states, “Following
the FTX fiasco, industry leaders should be transparent, especially
with respect to rules that are clearly black and white versus those
that need further clarity. We should work to educate regulators,
politicians, and the general public in a positive way to ensure any
new regulations or the interpretation of current regulations allow
the U.S. to become a leader in blockchain innovation.”
BTCS's non-custodial staking-as-a-service
platform, StakeSeeker, significantly differs from other industry
staking programs. StakeSeeker only operates a non-custodial model,
which contrasts with the custodial models utilized by Kraken,
Coinbase, and others. The differences between BTCS's StakeSeeker
model and the custodial models under scrutiny have been outlined in
our recent press release on February 10, 2023, where we clarified
how StakeSeeker operates within the parameters of the Howey test
and does not in our view create securities. The following table
summarizes the key differences between BTCS’s, Coinbase’s, and
Kraken’s business models which the SEC has taken issue with.
Key Howey Test Components |
Kraken |
Coinbase(Earn Program) |
BTCS |
Has custody of user crypto assets?i.e. an investment |
Yes |
Yes |
No |
Pool crypto assets with others?i.e. a common enterprise |
Yes |
Yes |
No |
Expectation of profits from effort of others? |
Yes |
Yes |
No |
Allen continues “We believe it is essential to
differentiate between non-custodial staking models like ours and
the practices that have been called into question by regulators. We
have proactively analyzed our staking model and drawn conclusions
that align with those presented by Coinbase regarding “Core
Staking” and while we believe our non-custodial staking does not
create securities, we cannot provide assurances that either the SEC
or other regulatory authorities will agree.”
“As the oldest public company in the crypto and
blockchain sector, we have learned many lessons over the years. Our
commitment to offering a transparent, secure, and compliant
non-custodial staking model demonstrates our dedication to the best
interests of the industry and the general public.” stated
Allen.
For more information on BTCS's StakeSeeker and
its non-custodial staking model, please visit
https://stakeseeker.com/.
About BTCS:BTCS Inc. is a
Nasdaq listed company operating in the blockchain technology space
since 2014 and is one of the first U.S. publicly traded companies
with a primary focus on blockchain infrastructure and staking. BTCS
secures and operates validator nodes on disruptive next-generation
blockchain networks that power Web 3, earning native token rewards
by staking our proof-of-stake crypto assets. “StakeSeeker” is BTCS’
newly introduced proprietary Cryptocurrency Dashboard and
Staking-as-a-Service platform, developed to empower users to better
understand and grow their crypto holdings with innovative portfolio
analytics and a non-custodial process to earn staking rewards on
crypto asset holdings. Users can easily link and monitor their
cryptocurrency portfolios across exchanges, wallets, validator
nodes, and other sources; and have access to a suite of data
analytic tools such as performance and reward tracking.
StakeSeeker’s Staking Hub allows users to earn rewards by directly
participating in network consensus mechanisms by staking and
delegating their cryptocurrencies to company-operated validator
nodes for a growing number of supported blockchains. As a
non-custodial validator operator, BTCS receives a percentage of
token holders staking rewards generated as a validator node fee,
creating the potential opportunity for a highly scalable business
with limited additional costs. For more information visit:
www.btcs.com.
Investor Relations:ir@btcs.com
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