Coinbase (NASDAQ: COIN) share price dropped by 14%, the most it has dropped by since July 2022 when the exchange faced a probe by the US SEC for its cryptocurrency listing. Yesterday’s plunge was after the Kraken exchange agreed to pay $30 million for issuing unregistered securities.
The stock closed at $59.63 on Thursday down −9.81 (14.13%) from the day’s opening price of $68.51. At press time, COIN had dropped by an additional −0.95 (1.59%) in the pre-market hours.
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US SEC goes after crypto staking
The SEC was probing Coinbase for some of its crypto listings thought to have been unregistered securities. The lawsuit filed in 2021 alleging that Coinbase Global Inc sold unregistered securities, was dismissed by a US judge early this year.
However, yesterday, Kraken reached a settlement deal with the US SEC after months of investigations for offering unregistered securities as crypto staking services. In the deal, Kraken is to pay $30 million in civil penalties and disgorgement and discontinue the crypto staking services.
The news came barely after Coinbase CEO Brian Armstrong shared a tweet about hearing rumours that the US SEC was planning to get rid of crypto staking for US retail users.
In the follow-up Twitter thread, Armstrong argued that staking should not be classified as a security saying that it is one of the best things to happen for the crypto space.
Coinbase trouble should the rumours be true
There are concerns that should the SEC go ahead with banning crypto staking, Coinbase, a US-based crypto exchange with the second-largest deposit of Ether (ETH), would drastically affect the exchange. Liquid staking protocol Lido has the largest ETH deposits, with Kraken holding the third position after Coinbase and Binance in the fourth position.
Staking revenue accounted for about 11% of Coinbase’s net revenue in Q3 2022, which was an 8.5% increase from the previous quarter. The SEC’s actions might trouble the already struggling exchange that recently announced cutting down operation costs due to market conditions.