- What – Coinbase stock is facing its most significant 24-hour loss in the past seven months.
- Why – The price is declining because of the ongoing SEC investigation.
- What Next – The agency has recently been ramping up its enforcement actions, targeting initial coin offerings (ICOs) and other crypto-related activities that it views as problematic.
Also, the United States SEC shutting down Kraken, another digital currency exchange, affected Coinbase Stock price. Notably, COIN prices dropped by 14% after the SEC announced the shutdown.
Coinbase Stock Declines In Price
San Francisco-based cryptocurrency exchange, Coinbase, saw its stock price drop on Thursday following an announcement from the US Securities and Exchange Commission (SEC) regarding a crackdown on crypto staking.
Generally, staking is a process by which cryptocurrency holders earn rewards for holding and validating transactions on a blockchain network. The SEC’s announcement stated that it considers such rewards as unregistered securities offerings and that companies offering staking services could violate federal securities laws.
At the close of the market on Thursday, COIN was trading at approximately $59.63 after beginning the day at $68.51. In the meantime, COIN trades at $57.09 at the time of writing, which indicates approximately a 14% decline.
The news sent shockwaves through the crypto industry, with many companies offering staking services rethinking their business models. Coinbase, one of the most prominent players in the space, was not immune to the fallout.
Meanwhile, July was the last time Coinbase stock witnessed such a price decline. The event occurred after the SEC interrogated the platform regarding the listings of its digital currencies.
The SEC’s crackdown on crypto staking is part of a broader effort to regulate the industry. The agency has clarified that it will take a closer look at crypto staking and other similar activities and will take enforcement action against companies that are not complying with its regulations.
This move will also ensure that companies operating in the space adhere to federal securities laws. The development will likely impact the crypto industry significantly, and it remains to see how companies will respond.
SEC Commits To Cracking Down Crypto Staking
In a recent statement, the SEC announced that it has begun investigating several companies offering staking services to see if they are violating federal securities laws. Investigating crypto-stocking service providers is part of the SEC’s broader efforts to regulate the rapidly growing crypto market.
But the crackdown on staking service providers has made some industry leaders call for greater clarity on the regulatory environment for crypto. Many believe that transparent and predictable regulation would help to promote innovation and growth in the sector.
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