• Coinbase stock is facing its largest 24-hour decline in the past 7 months.
• The price drop is due to the SEC’s investigation into crypto staking activities.
• The SEC has been ramping up enforcement actions against ICOs and other crypto-related activities.
Coinbase Stock Plummets After SEC Enforcement Actions
Coinbase stock faced its most significant 24-hour loss in the past seven months following an announcement from the US Securities and Exchange Commission (SEC) regarding a crackdown on crypto staking. 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. At the close of the market on Thursday, COIN was trading at approximately $59.63 after beginning the day at $68.51, indicating a 14% decline.
Impact of SEC Investigation
The news sent shockwaves through the crypto industry, with many companies offering staking services rethinking their business models. Coinbase, one of the most prominent players in this space, was not immune to the fallout either as its stock price dropped significantly following the announcement by SEC. Notably, July was also the last time Coinbase stock witnessed such a price decline when it experienced intense interrogation by SEC regarding listings of digital currencies on their platform.
What is Crypto Staking?
In general terms, crypto staking is a process by which holders earn rewards for holding and validating transactions on blockchain networks. It involves cryptocurrency holders locking their coins or tokens into specialized wallets for a set period to validate transactions on blockchains secured by proof-of-stake consensus algorithms – Ethereum 2 being one example – in return for rewards earned from those transactions fees collected from users who transact on them over time .
The US Securities and Exchange Commission considers such rewards as unregistered securities offerings and companies offering staking services can violate federal securities laws if they don’t comply with certain regulations imposed by them.
Shutdown Of Kraken
The United States SEC shutting down Kraken – another digital currency exchange – further affected Coinbase’s Stock prices as it declined by 14% after such announcement made by them.