(rejected)Crypto Advocacy Group seeks "Staking Regulations" Ahead of ETH 2.0 Launch, Cautions Against “Profit Opportunity”
Shaurya Malwa May 15, 2020 01:00
A cryptocurrency advocacy group, the Proof of Stake Alliance (POSA), is suggesting global standards to governments around the world in a bid to educate and bolster the development of digital assets and blockchain technology.
A cryptocurrency advocacy group, the Proof of Stake Alliance (POSA), is suggesting global standards to governments around the world in a bid to educate and bolster the development of digital assets and blockchain technology.
Staking to Move Crypto Economy
POSA revealed on May 14 the need for increased regulations ahead of Ethereum’s 2.0 update, which sees the protocol move to a PoS algorithm for network consensus.
POSA, with members like Coinbase, Polychain Capital, Tezos, and Cardano, is concerned about the acceptance of PoS systems, which give out rewards to node holders on staked funds. However, such mechanisms lead to an interest in staking protocol as a means of alternative investments, similar to interest-generating back deposits.
But the above creates regulatory hassles. Regulators are not appreciative of a crypto-based earnings system, even though the fundamental purpose of such mechanisms is different.
Evan Weiss, the founder of POSA, stresses regulations around PoS systems to help push the broader crypto “ecosystem” forward, creating industry-driven solutions for traditional markets in the process.
Weiss appeals to governments to see PoS systems are software service or infrastructure providers, instead of a financial product.
Some of the group’s recommendations include the following:
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Don’t provide investment advice to market participants
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Don’t call staking rewards “a profit opportunity”
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Focus advertising on network participation and security
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Don’t provide guarantees on staking rewards
Weiss adds:
“I do think [with] these networks, we are very clearly seeing that the technology underlying them is very powerful and I see it having an impact.”
POSA Open to all Staking Queries
Weiss reveals projects like Cosmos and Tezos, both POSA members, have already started offering staking services to users and have been “super reasonable” about guidelines. Firms, he reveals, want to collaborate with the U.S. Securities and Exchange Commission (SEC) instead of existing in a legal gray area.
POSA wishes to remain specific in its agenda, meaning members are not advocating the underlying benefits of cryptocurrencies or related questions. Instead, they are open to all concerns and questions about staking-as-a-service and wish to regularly publish educational material to increase understanding.
As of now, the group works under U.S. regulations but believes any judgment or instructions will be valid globally.
Meanwhile, Weiss cautions a repeat of 2017. He states firms must entirely avoid promoting staking-based currencies as a “profit opportunity,” which is “not a great allocation of resources.”
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