Bitstamp Stop Ethereum Staking Services In The United States, Here's Why!

The second largest crypto asset is based on market capitalization, ETH. (Photo; Doc. Unsplash)

JAKARTA - Bitstamp, one of the leading crypto exchanges, has announced plans to stop Ethereum staking services in the United States from September 25, 2023. This decision was taken in response to increasingly stringent regulatory demands in the country.

While the exchange argues that this step will not affect other services, the announcement still shocked the crypto community.

Staking, which has become an important part of the crypto ecosystem. This is a practice where cryptocurrency holders can lock up a number of their assets to support network operations and in exchange, get a share of the network reward. However, this decision opens discussions about whether staking can be considered an investment contract, in accordance with the Howey test implemented by the SEC.

Howey Tests And Staking Concepts In Crypto World

Howey's test, named the Howey Company vs. SEC case in 1946, was used to determine whether a transaction can be considered an investment contract or securities. If a transaction meets Howey's test criteria, then it is considered an investment that must comply with applicable regulations. In the context of Ethereum staking and other cryptocurrencies, debate arose over whether asset lockdowns to support the network could be considered "investing money".

Bitstamp, through a statement by the US CEO and his global head of marketing, Bobby Zagotta, stated that they were discontinuing staking services in the United States because this practice was deemed to meet Howey's test requirements. This raises questions about whether staking can actually be considered an investment contract in a legal context.

Bitstamp's decision to stop staking services in the United States has had a significant impact on the crypto community in the country. Staking in the US will no longer receive rewards for their support for the network. However, there is also a view that states that staking is in line with Howey's "coup" spirit of testing, as participants actively contribute to the security and function of blockchain networks.

Uncertainty about whether staking can be considered an investment contract or not will continue to be a heated debate in the crypto world. In the era of regulatory uncertainty, questions about the legal definition of staking and its contribution to blockchain networks will remain in the spotlight.