The Securities and Exchange Commission (SEC) is said to be considering banning crypto-staking services. In response, Cardano’s Charles Hoskinson expressed his opinion on the matter, training his eyes on Ethereum, whose staking model he said is problematic.
Hoskinson: Locked bets are a red flag
According to Hoskinson, the fact that ethereum coins are locked in smart contracts that are completely inaccessible gives the impression that they are controlled assets.
Hoskinson says that gambling on ethereum also presents many challenges. The temporary transfer of assets from one party to another in exchange for compensation from that party is similar to the sale of a regulated financial product. Charles believes that cut and join might be more effective instead of this system.
In the reply tweet to Armstrong’s first article, he further explained that non-custodial liquid staking is analogous to the mining pools that the bitcoin community has been using for the last 13 years.
According to the Cardano boss, his team broached the issue of betting on the protocol to a model largely governed by the community rather than a select group of users.
Shibetoshi, the founder of Doge, another renowned crypto insider who commented on Armstrong’s thread, seemed somehow not to support the ban and wondered why the government would pass up such a tax opportunity, bringing further weight. and questions to the alleged SEC move.
What could this mean for the ecosystem?
Even if the information is still considered rumour, many involved in the business are remarkably preparing for the market regulator to impose an actual ban.
According to Hoskinson, the “basic misunderstanding about the actual facts of operation and design” will cause the SEC to classify all staking products under the same umbrella, even though each one has unique characteristics.
He added that while most staking protocols have chosen to build centralized rather than decentralized systems, it is a move that will ultimately be detrimental to the industry.
The SEC has been granted the authority to regulate cryptocurrencies pending a change in the regulatory landscape in the United States. As a result, the commission has launched various enforcement actions against many companies, including Ripple Labs Inc. and LBRY.
