Cardano CEO Says Ethereum Staking Is Problematic, Here's Why
With the growing rumor that the United States Securities and Exchange Commission (SEC) is planning to ban crypto staking services, expert, including Cardano founder Charles Hoskinson, have shared their stance on the matter. Hoskinson believes one of the prominent protocols in the industry, Ethereum, offers what he named problematic staking.
The rumor was first broken by Coinbase CEO Brian Armstrong on the premise that users' staking rewards when they lock their cryptocurrencies looks a lot more like dividends paid out to security token holders.
For Hoskinson, the absolute inaccessibility of Ethereum tokens locked in staking smart contracts makes them look like regulated products.
According to the Cardano boss, his team approached the subject of staking on the protocol to a model one that is mostly controlled by the community instead of a few users.
Bad twist for industry
While the news is still tagged as a rumor, industry participants are notably gearing up for an actual ban by the market regulator. According to Hoskinson, the "fundamental misunderstanding about the actual facts of operation and design" will make the SEC categorize all staking products as one and the same irrespective of their differences.
He believes designing a centralized system instead of a decentralized one, as most staking protocols have done, is billed to hurt the industry. With the SEC empowered to regulate crypto pending a regulatory change in the U.S., the commission has brought a lot of enforcement actions against several companies, including Ripple Labs Inc and LBRY.