Coinbase has begun its transition to on-chain staking for four cryptocurrency assets, according to an announcement on March 23.
Four assets affected, one abandoned
Coinbase’s announcement and an attached help page say customers “will earn rewards through the protocol, not Coinbase” under the new approach. The firm claims that its only role will be to connect clients to validators on the relevant blockchain.
Coinbase will pause staking and withdraw staking starting March 24 and resume these capabilities on March 29. Users will continue to earn funds during this period.
The policy applies to four of the five assets that can be staked through Coinbase: Tezos (XTZ), Cosmos (ATOM), Solana (SOL) and Cardano (ADA).
The policy does not apply to Ethereum (ETH) staking, which is also supported by Coinbase. This is likely due to the fact that Ethereum does not yet support stake withdrawals and has high technical and deposit requirements for on-chain staking.
Coinbase also said Algorand (ALGO) staking will be halted on March 29. The company will nevertheless pay out remaining ALGO staking rewards to users and continue to support ALGO trading on its main exchange.
Has the regulation brought about the change?
It is unclear whether the actions are related to the Wells notice that Coinbase received from securities regulators. Statements from Coinbase today suggest the changes were expected as early as March 10 – before this notice was received.
It’s possible the changes were influenced by Coinbase’s warning in February that the U.S. Securities and Exchange Commission (SEC) intends to take action against retail staking products. The SEC then took action against Kraken, which may have motivated Coinbase to introduce a staking service in which it plays only a minimal role.
Staci Warden, CEO of the Algorand Foundation says that Coinbase told him he was reviewing his services following a regulatory review. Warden was apparently unaware of the Wells notice from Coinbase until a commenter on this Twitter thread informed him of the development.
Elsewhere, Coinbase said in a statement to Cointelegraph that it had halted Algorand staking for customer experience reasons. He did not comment on the reasons for the other changes.