Algorand Foundation CEO Stacy Waden has confirmed on Twitter the rumors about Coinbase’s decision to discontinue Algorand (ALGO) rewards for retail customers. Coinbase and Algorand, however, cite different reasons for the move.
According to Following Waden’s tweet, Coinbase informed Algorand of the sudden culmination of rewards for ALGO tokens on March 22, as the exchange evaluates its portfolio of products and services following a Wells Notice issued by the Securities and Exchange Commission (SEC). ) from the United States that same day.
hi #algofamwoke up this morning, like many of you, to find that @coinbase killed rewards. They’ve now informed us that they are evaluating their services in light of recent regulatory scrutiny, and, for that reason, they will no longer support Algo rewards for Retail customers. 1/
— staci.something (@StaciW_DC) March 22, 2023
The change does not affect trading of ALGO tokens or governance rewards for institutional investors, Waden added in the thread.
Coinbase has denied these claims. “Algorand news is unrelated,” an exchange spokesperson told Cointelegraph, ensuring that stopping ALGO rewards is not linked to recent regulatory events:
“Coinbase works closely with asset issuers to provide rewards and continually re-evaluates our offerings to ensure the best customer experience. We have decided to discontinue Algorand (ALGO) rewards at this time.”
Cointelegraph contacted the Algorand Foundation, but did not receive an immediate response.
Coinbase is the last cryptocurrency company to be targeted by US regulators in 2023. After receiving a Wells Notice on March 22, the exchange’s chief legal officer, Paul Grewal, said the warning “comes after Coinbase provided multiple proposals to the SEC on registration over the course of months, all of which the SEC ultimately declined to respond.”
Grewal further said that Coinbase has “repeatedly and formally called on the SEC to get involved in rulemaking for our industry.” This includes the filing of a rulemaking petition in July 2022, the filing of a comment letter on March 20 in support of the petition, and the request for clarity on the SEC’s views on staking services and the lack of notification provided to industry. According to Grewal:
“Just two days later we received a Wells Notice that includes our staking services, the same staking services referenced 57 times in the S-1 that the SEC reviewed in 2021 when we became a public company.”
Coinbase’s notice came less than two months after the SEC settled with cryptocurrency exchange Kraken for “failing to register the offer and sale of its crypto asset staking program as a service,” which, according to the commission, were classified as securities and fell within its scope of competence. As part of the settlement, Kraken agreed to cease operations of its US staking program and pay $30 million in restitution, late-payment interest, and civil penalties.
A Wells Notice is a letter advising a company that the SEC may take action after identifying possible violations of securities law. Despite the notice, the exchange says that its products and services “continue to function as usual.”
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