Coinbase tumbled 14% as regulators clamped down on on-chain pledges

23-02-10 11:04

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原文标题：《监管打击链上质押 Coinbase 重挫 14% 创半年来最大跌幅》

Original article by Chang Jiasai, The Wall Street See

The rebound of Bitcoin in the beginning of the year has brought a dose of heart to the nervous currency circle. But now, with the heavy hand of US regulators, the outlook for crypto assets has once again become unclear.

The SEC is finally cracking down on collateral

Staking, the world's second-largest cryptocurrency exchange, is staking, and shares of Coinbase are staking, the biggest staking in more than six months. The staking staking staking staking staking staking was encouraged by the staking of rival Kraken by U.S. regulators.

Kraken was previously charged by the U.S. Securities and Exchange Commission with providing illegal on-chain pledge services. The SEC concluded that Kraken's peddling of on-chain pledge products constituted a violation of securities sales.

According to media reports, Kraken has reached a settlement with the SEC in the case, agreeing to stop offering pledge services and pay $30 million in recovery, prejudgment interest and civil penalties.

Bitcoin fell 4.6% on the news, falling back below $22,000.

Staking is an staking staking approach to mining. Unlike bitcoin mining, the former uses a proof-of-work mechanism (POW), which requires nodes to continuously perform hash calculations to verify the validity of transactions.

Pledging requires less computing power and does not have such a high hardware threshold. It is based on proof of Interest (POS) and agent Proof of Interest (DPOS) mechanisms, requiring users to prove ownership of a certain amount of digital currency. Users only need to lock up a certain amount of cryptocurrency in a digital wallet or trading platform and run it for a period of time to reap the benefits. Revenue includes block rewards generated by smart contracts, typically some kind of digital currency. It's like putting money in a bank and charging interest.

In addition, if a smart contract is used with a lending function, the investor can act as the lender and receive interest on the loan when someone else needs to borrow a digital currency.

Kraken's pledge service offers an annual interest rate of up to 20% and promises to send a pledge return to customers twice a week.

Pledge has long been a thorn in the side of the SEC. Gary Gensler, the SEC's chairman, argues that a pledge and a loan are essentially the same thing.

Is regulation hurting innovation by cutting people off?

According to media reports, Coinbase CEO Brian Armstrong learned of Kraken's settlement with the SEC on Wednesday evening. He accused the SEC of wanting to completely strip retail investors of the opportunity to participate in on-chain pledge, which he called "a very important innovation."

Paul Grewal, the trading platform's chief legal officer, told the media:

"It is clear from today's announcement that Kraken is in fact offering an income product. Coinbase's pledge service is different in nature and it is not a security."

On-chain pledge has become an important source of revenue for trading platforms such as Kraken and Coinbase, as the plunge in crypto asset prices has reduced trading volumes.

Coinbase's revenue, largely from pledges, accounted for 11% of the company's net revenue in the third quarter of 2022, up from 8.5% in the second quarter. Coinbase is the second largest depositor of ether. Speculators have pledged billions of dollars' worth of ether through trading platforms and decentralized trading platforms such as Lido and Rocket Pool to make gains.

Now, with the SEC cracking down, the future looks bleak for the once savage mortgage service. Marc Arjoon, research associate at cryptocurrency investment firm CoinShares, said:

"The Kraken case serves as a cautionary tale for other trading platforms offering similar services."