“I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen,” Brian Armstrong tweeted Wednesday.

Coinbase CEO Brian Armstrong says he’s heard rumors the U.S. Securities and Exchange Commission would like to ban retail investors from engaging in cryptocurrency staking, the income-generating technique at the core of running blockchains including Ethereum.

“I hope that’s not the case as I believe it would be a terrible path for the U.S. if that was allowed to happen,” he tweeted Wednesday.

While Armstrong’s suspicions may come as a surprise to many in the industry, SEC Chairman Gary Gensler has previously stated that cryptocurrencies that allow staking could be classified as securities under the Howey test – even though ether has been designated as a commodity by the SEC’s sister regulator, the Commodity Futures Trading Commission (CFTC).

After a Congressional hearing in September 2022, Gensler told reporters that, though he wasn’t referring to any token in particular, staking was “another indica that under the Howey test, the investing public is anticipating profits based on teh efforts of others.”

A significant amount of money is staked. The value of staked assets was about $42 billion in the fourth quarter of 2022, with annualized staking rewards of $3 billion, according to a report from Staked, a non-custodial staking service provider. That figure was not limited to just retail investors.

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