Coinbase Suspends Ethereum Staking Reward Withdrawal for Three Days, Cites Technical Problem

On May 16, the leading crypto exchange in the US, Coinbase, suspended the  Ethereum (ETH) staking rewards due to technical challenges. The Coinbase team revealed that the suspended ETH staking platform would continue to allow the user to earn rewards which will be paid out after resolving the technical problem.

After assessing the technical hitch, the Coinbase team revealed that it would require three days to address the concern. In their address, they confirmed to identify the system failure, and they would prioritize fixing the bug.

Will Coinbase Team Address the Technical Problem in 3 Days? 

The report illustrated that due to the technical problem, the system would require 48 to 72 hours to address the concern. 

Over the past, the investors have used the Coinbase staking platform to deposit Ether and other proof of stake cryptos. The crypto assets on the Coinbase staking are then utilized to secure blockchain that allows the user to earn measurable rewards.

The distinctive features of the Coinbase digital products allow investors to access the platform and engage in ETH staking easily. Unlike the ordinarily individual staking products that require the user to deposit a minimum of 32 Ether which translates to $58300, the Coinbase platform has no minimum deposit.

A few months ago, the Securities and Exchange Commission (SEC)  alleged that some of the best-performing crypto firms offering staking products contravened US  regulations. In February, the SEC filed a new lawsuit against crypto exchange Kraken for providing unregistered staking services.

Does Coinbase Staking Product Conform with SEC Regulations?

In their submission, the court argued that Kraken failed to conform with the SEC regulation and withheld relevant information on risk associated with staking products. The court ruled out that Kraken should suspend the ETH staking withdrawal platform indefinitely to meet the regulatory requirements.

Additionally, Kraken non-compliance with the SEC regulation subjected the firm to settle a court fine amounting to $30 million. 

Even though the SEC has not imposed charges on Coinbase staking products, the regulatory agency issued a Well Notice in March.

A scrutiny of Coinbase Well Notice revealed that the SEC would take potential legal action against the crypto exchange for violating the securities regulations. Responding to the Well Notice, the Coinbase team argued that the SEC was examining the conformity of most of its digital products, such as staking services offered. The Coinbase report indicated that the staking services are not classified as securities. 

Coinbase Demands for SEC Regulatory Clarity

The team agreed to undergo further potential action against the SEC in a US court to address the matter. In July, the crypto exchange filed a petition requesting the SEC to clarify crypto regulations. 

After the long wait, the SEC  offered their responses to Coinbase, urging the court to dismiss claims submitted by the crypto exchange. The SEC argued that the Coinbase team demanded the commission adopt a different regulatory approach, which was impractical. 

The SEC responses created mixed thoughts among the Coinbase community. Some Coinbase users argued that the SEC action forced the crypto exchange to halt the ETH staking rewards.

A subsequent report from the Coinbase team revealed that the  SEC May 16 response was not associated with suspension of the ETH staking platform. The Coinbase team plans to issue a statement after either 48hrs or 72 hrs explaining the nature of the technical issue on the ETH staking product.  

In the meantime, the Coinbase team will keep the community updated on the progress of fixing the technical problem.

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