Shares of Coinbase, COIN, posted +2.2%, but the crypto-exchange is struggling to protect its staking program, which is already restricted in four US states.
Summary
Coinbase and COIN performance despite crypto-exchange’s problems with staking
Shares of Coinbase (COIN) have just registered a +2.2% pump in the last 24 hours, bringing the price to $94.76.
This is a very strong performance when one considers that only last month, COIN was worth $71.55. Basically, in the last month of July, COIN recorded a +32% increase in its price.
In that same month, however, the crypto platform came under pressure from the US Securities and Exchange Commission (or SEC) because of its staking program, which apparently does not comply with the law.
Specifically, as many as 10 states in the US have initiated proceedings against Coinbase, of which four states have also issued preliminary orders requiring the company to restrict staking services on their territories.
Hence, users in California, New Jersey, South Carolina and Wisconsin will no longer be able to access Coinbase’s staking services, which allow customers to temporarily pawn their cryptocurrencies to earn additional tokens.
In this regard, Coinbase said it will work to oppose the charges as follows:
“Staking is a core part of ensuring that the cryptoeconomy functions for hundreds of millions of users around the globe/ Staking services are just one part of Coinbase’s existing business. But because staking is so fundamental to the crypto industry, Coinbase is committed to protecting access to staking for everyone.”
Coinbase: how is the crypto-exchange’s staking program progressing?
Coinbase’s program called Earn offers staking for 90 digital assets, including ether, solana, cardano, polkadot, and cosmos. The Earn program offers returns of up to 10%, paid in the networks’ native tokens.
According to data reported by Forbes, it appears that at the end of the second quarter, the cumulative value of all staked assets was $68 billion, a 61% increase over the previous quarter.
Not only that, annualized staking rewards also reached $5 billion, a 66% increase over the first quarter. Liquid staking, a recent structure that allows investors to continue to use their tokens in other ways while in staking, accounts for an increasing percentage of the market.
It is 44% of the $45 billion in total locked value (or TVL) of ETH in all decentralized finance (DeFi) offerings.
Moreover, it can be said that in addition to trading fees, staking is one of Coinbase’s main revenue streams. In the first quarter, staking generated $73.7 million, 9.5% of Coinbase’s revenue.
This is higher than Coinbase’s institutional custody service, Coinbase Custody, which accounts for only 2.2 % of total revenue.
The announcement of the closure of the Borrow program
While Coinbase is committed to sustaining and protecting its staking program, the crypto-exchange has announced the total shutdown of its Borrow service.
Specifically, the crypto-exchange had already suspended the disbursement of new loans in May, and by 20 November decided that they would all be terminated.
This program was dedicated to retail customers and allowed them to obtain loans by providing Bitcoin (BTC) as collateral.
It is likely that this service was not very successful, which is perhaps the motivation behind Coinbase’s decision to shut it down altogether.
