• Coinbase stock price dropped due to the ongoing SEC investigation and their recent filing against crypto staking.
• The SEC has recently been ramping up its enforcement actions, targeting initial coin offerings (ICOs) and other crypto-related activities that it views as problematic.
• Coinbase, one of the most prominent players in the space, was not immune to the fallout and saw its stock price drop by 14%.
Coinbase Stock Plummets After SEC Enforcement Actions
San Francisco-based cryptocurrency exchange, Coinbase, saw its stock price drop on Thursday following an announcement from the US Securities and Exchange Commission (SEC) regarding a crackdown on crypto staking. Generally, staking is a process by which cryptocurrency holders earn rewards for holding and validating transactions on a blockchain network. The news sent shockwaves through the crypto industry with many companies offering staking services rethinking their business models.
The SEC’s announcement stated that it considers such rewards as unregistered securities offerings and that companies offering staking services could violate federal securities laws. At the close of the market on Thursday, COIN was trading at approximately $59.63 after beginning the day at $68.51. In the meantime, COIN trades at $57.09 at the time of writing, which indicates approximately a 14% decline since July when Coinbase faced similar issues with regards to listing digital currencies.
Ramping Up Enforcement Actions
The agency has clarified that it will take a closer look at crypto staking and other similar activities and will take enforcement action against companies that are not complying with its regulations. This move will also ensure that companies operating in the space adhere to federal securities laws with regards to issuing digital tokens or any other form of asset-backed currency.
Kraken Shutdown Impact
Notably, COIN prices dropped by 14% after Kraken—another digital currency exchange—was shut down by United States authorities recently as well.
Coinbase Stock witnessed significant decline following news about US Securities and Exchange Commission’s enforcement actions on digital currency exchanges for violating federal securities law related to issuance of tokens or any other form of asset-backed currencies. Moreover, another factor contributing towards this decline is shutting down Kraken—another leading digital currency exchange—by U S authorities recently as well