Neil Elan recently spoke to ALM about the news that the Vermont Department of Financial Regulation recently put an end to its investigation into whether Coinbase's staking services violated their state's securities law. This follows the federal court's February 28th approval of a stipulation between the SEC and Coinbase for dismissal with prejudice of the pending federal action, signaling a shift in line with the federal government's evolving stance on crypto, where states are now expected to await federal guidance on crypto regulations.
Crypto staking is a process where individuals lock up their crypto tokens for a set period to help validate blockchain transactions and earn rewards in return, a practice only possible on "proof of stake" blockchains like Ethereum.
Neil tells ALM that ex-Chair of the U.S. Securities and Exchange Commission, Gary Gensler, pursued actions against Coinbase along with other large operators in the cryptocurrency space, including Binance and Kraken, under the Biden administration.
"This 'regulation by enforcement'—where rules and standards were made through real-time cases, as opposed to clearly defined, predictable standards with advance notice—drew criticism from operators in the cryptocurrency industry," he explains.
Neil adds that the Trump administration's new leadership and vastly different stance on the SEC's regulations on digital assets has led to SEC's formation of the Crypto Task Force.
"The anticipated regulatory regime will contain specific disclosure requirements that will apply to token offerings and even potentially provide temporary immunity for token offerings that comply with interim measures until a more robust regulatory regime is crafted and implemented," Neil explains to ALM. "The new Crypto Task Force has also expressed a strong interest in working with Congress to clearly delineate the jurisdiction of the SEC on issues involving digital assets," he concludes.
