Coinbase and Algorand give divergent reasons for staking reward suspension

Algorand Foundation CEO Stacy Waden took to Twitter to corroborate rumors astir Coinbase's determination to discontinue Algorand (ALGO) staking rewards for retail customers. Coinbase and Algorand, however, mention antithetic reasons for the move.

According to Waden's tweet, Coinbase informed Algorand astir the abrupt termination of rewards for ALGO tokens connected March 22, arsenic the crypto speech evaluates its portfolio of products and services pursuing a Wells Notice issued by the United States Securities and Exchange Commission (SEC) the aforesaid day.

Hi #algofam, woke up this a.m, similar galore of you, to find that @coinbase killed rewards. They've present informed america that they are evaluating their services successful airy of caller regulatory scrutiny, and, for that reason, they volition nary longer enactment Algo rewards for Retail customers. 1/

— staci.algo (@StaciW_DC) March 22, 2023

The alteration does not impact the ALGO token trading and governance rewards for organization investors, Waden added successful the thread. 

The claims person been denied by Coinbase. "The Algorand quality is not related," a spokesperson for the crypto speech told Cointelegraph, asserting that halting ALGO rewards is not tied to caller regulatory developments:

"Coinbase works alongside plus issuers to supply rewards and continuously reevaluates our offerings to guarantee the champion lawsuit experience. We person decided to discontinue Algorand (ALGO) rewards astatine this time."

Cointelegraph reached retired to the Algorand Foundation but did not person an contiguous response.

Coinbase is the latest crypto institution to beryllium targeted by U.S. regulators successful 2023. After receiving a Wells Notice connected March 22, the exchange's main ineligible serviceman Paul Grewal said the informing "comes aft Coinbase provided aggregate proposals to the SEC astir registration implicit the people of months, each of which the SEC yet refused to respond to."

Grewal further said Coinbase has "repeatedly, formally asked the SEC to prosecute successful rulemaking for our industry." This includes filing a petition for rulemaking in July 2022, submitting a remark letter connected March 20 supporting the petition, and requesting clarity astir the SEC's views connected staking services and the deficiency of announcement provided to the industry. According to Grewal:

"Just 2 days aboriginal we received a Wells announcement that includes our staking services – the aforesaid staking services referenced 57 times successful the S-1 the SEC reviewed successful 2021 erstwhile we became a nationalist company."

The Coinbase announcement was sent little than 2 months aft the SEC reached an statement with crypto speech Kraken for “failing to registry the connection and merchantability of their crypto plus staking-as-a-service program,” which the committee claims qualified arsenic securities nether its purview. As portion of the settlement, Kraken agreed to cease operations of its U.S. staking programme and wage $30 cardinal successful disgorgement, prejudgment interest, and civilian penalties.

A Wells Notice is simply a missive informing a institution that the SEC whitethorn travel with enforcement enactment aft identifying imaginable violations of securities law. Despite the notice, the crypto speech says its products and services "continue to run arsenic usual."