https://twitter.com/brian_armstrong/status/1623459203150131201
- brian_armstrong
Brian came out with a rumor yesterday that SEC is looking to ban staking. Ofcourse this made me interested in reading the thread since HIVE has staking and Brian is definitely someone well connected in this industry so he would hear something sooner than the rest of us.
The description of this potential banning is vague. Does it refer to custodial staking? User Onchain staking? Thats quite an important thing to disclose which he does not.
Custodial staking ive always had a problem with as I consider CEXes parasites and a massive liability for the crypto space. In the case of custodial staking centralized entities have direct power and control over decentralized blockchains through using customer funds. Id say everyone on Hive has an issue with this which is why we implemented restrictions to it.
If SEC is talking about user onchain staking then thats a different thing. It would be much harder to enforce but doable. Again, CEXes, the massive liability they are, would be a way to do it. SEC would simply require all US regulated CEXes to remove all and any coins with staking and since the market is so wholly dependent on CEX liquidity that would hurt projects massively.
If you wanted, ofc you could still trade your coins for BTC and sell it but you would be put in a position of committing fraud.
Again, this is all up for speculation, being a rumor, as we dont know what SEC wants to actually do.
There is definitely a clear distinction between these two things with CEXes being the unifying instability factor in both cases.
When it comes to "Blockchain" and "Securities" its much easier to determine what is a security and what it is not in relation to different projects than it is when it comes to just staking itself.
If you take basic definition derived from the Howey test:
"investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others."
The SEC could make the claim that custodial staking fits this description but this would only affect CEXes and they would have to cease with offering APR on staking.
SEC could not make the claim that user onchain staking fits this (Or they could and simply lose the case in the end).
In a truly decentralized system like HIVE there is no "common enterprise" and "no expectation of profits from the efforts of others". There is a DAO that you expect to fund efforts of random people but it is you, the investor, that controls the DAO. Then there are ofc your efforts. There is no third party so there cannot be an agreement of any sorts.
Centralized platforms like BSC, SOLANA, TRON or almost anything that had a ICO, I would say fit the security description much better than HIVE.
If indeed SEC goes either route I feel we should be safe. Even with the second, more extreme case most blockchains are distinct enough to not allow throwing all staking under the same umbrella.
And as is the case with HIVE... who is that "third party" and where are you going to send the court summons?😅
