Coinbase has begun its transition to on-chain staking for four cryptocurrency assets, according to an announcement on March 23.
Four assets affected, one discontinued
Coinbase’s announcement and an attached help page say that customers will “earn rewards from the protocol, not Coinbase” under the new approach. Th firm says that its only role will be to connect customers to validators on the relevant blockchain.
Coinbase will pause staking and unstaking beginning on March 24 and will resume those capabilities on March 29. Users will continue to earn funds during that time.
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 that Algorand (ALGO) staking will be discontinued on March 29. The company will nevertheless pay out remaining ALGO staking rewards to users and will continue to support ALGO trading on its main exchange.
Did regulations lead to the change?
It is unclear whether the actions are related to the Wells notice that Coinbase has received from securities regulators. Statements from Coinbase today suggest that the changes were scheduled as early as March 10 — prior to its receipt of that notice.
It is possible that the changes were influenced by Coinbase’s February warning that the U.S. Securities and Exchange Commission (SEC) intends to take action against retail staking products. The SEC later took action against Kraken, which may have motivated Coinbase to introduce a staking service in which it only plays a minimal role.
Algorand Foundation CEO Staci Warden said that Coinbase told her that it is reexamining its services following regulatory scrutiny. Warden was seemingly unaware of Coinbase’s Wells Notice until a commenter in that Twitter thread informed her of the development.
Elsewhere, Coinbase said in a statement to Cointelegraph that it halted Algorand staking for customer experience reasons. It has not commented on reasons for the other changes.